Author: Mark Friedenbach 2017-09-29 01:06:29
Published on: 2017-09-29T01:06:29+00:00
The article "Redesigning Bitcoin's fee market" argues that bitcoin's current auction model for transaction fees is not achieving maximum clearing price and does not prevent strategic bidding behavior. The authors suggest moving to a "pay lowest winning bid" model where all transactions pay only the smallest fee rate paid by any transaction in the block, which would eliminate the need for fee estimate mechanisms and adjust transaction fees. This proposal could be soft-forked very easily and would have additional benefits such as allowing pre-signed transactions, explicit fees in multi-party transaction creation protocols, and applications with expensive network access to pay reasonable fees for quick confirmation. The proposed fee rebate would carry a marginal cost of 70-100 vbytes per instance, making it an expensive feature that may not be used by most transactions today. A worked-out proposal suggests allowing transactions to specify an implicit fee and one or more rebateable fees, with the smallest fee rate of any non-coinbase transaction being the marginal fee rate for the block. A per-block dust threshold is calculated using the marginal fee rate, and for each transaction, the required fee is calculated to be the marginal fee rate times the size/weight of the transaction. Excess implicit fees are added to the miner's fee tally, and any remaining dust is added to the implicit fee tally. The miner is allowed to claim subsidy + the miner's fee tally + the explicit fee tally for themselves in the coinbase, and the coinbase is required to contain all rebated fees above the dust threshold. Overall, this proposal would establish the marginal fee rate and allow for smoother fees or other incentives.
Updated on: 2023-06-12T19:14:24.486915+00:00