Author: Mark Friedenbach 2015-05-10 22:31:46
Published on: 2015-05-10T22:31:46+00:00
The proposal suggests that miners can trade subsidy for increased fees of a larger block. This is only profitable when the marginal fee per KB exceeds the subsidy fee per KB. However, the fee rates are not uniform and as the block size shrinks, the marginal fee rate goes up. The limits on both the relative and absolute amount a miner can trade subsidy for block size prevent incentive edge cases and prevent a sharp shock to the current fee-poor economy.The proposal also allows miners to select a different difficulty (nBits) within a certain range for each block they mine, which is used for the proof of work check. This selected difficulty raises or lowers the maximum block size for that block by a function of the difference in difficulty. A linear identity transform is assumed for simplicity but other functions with compounding marginal cost may be preferred. However, there is a concern about how a linear identity transform between block size and difficulty would work. The miner's reward for finding a block is the sum of subsidy and fees. With a linear identity transform between block size and difficulty, the miner will be allowed to collect fees from a block of size S'=S(1+x). In the best case, collected fees will be proportional to block size. So, with this linear identity transform, increasing block size never increases the miner's gain. The email thread also discusses the importance of using more interesting functions in place of the linear identity transform for didactic purposes.
Updated on: 2023-06-09T20:09:26.942747+00:00