Author: Chenxi Cai 2017-11-30 16:15:01
Published on: 2017-11-30T16:15:01+00:00
The current fee system used in Bitcoin, Generalized first-price auction, may not be maximizing miners' fees as it ignores the heterogeneity in willingness to pay among bidders within the same block and allows spamming. A two-part pricing scheme involving a fixed fee per transaction plus variable fee per byte could work better by deterring spamming of the mempool and not losing revenue from people with higher willingness to pay. Auction theory has been studied extensively in economics literature, and while Vickrey–Clarke–Groves auction elicits truthful bids from bidders, it may not maximize miners' fees as much as the other two systems. Revenue Equivalence states that the choice of fee design will not impact miners' fees unless the outcomes of the auction changes. Changing the bidding system to the marginal price allows us to supersede the block size limit and change the outcome of the auction, as different transactions are included.
Updated on: 2023-06-12T22:22:30.869305+00:00