Author: Nick ODell 2015-07-15 00:29:10
Published on: 2015-07-15T00:29:10+00:00
In a discussion about transaction fees, the author compares paying for internet access to the costs of transactions. They suggest that every physical hop in the internet has related costs, such as placing and upgrading cables, but it doesn't matter how many hops your packets make or which route they follow - ISPs average out all the costs and present a fraction of that to each customer. The author believes that immediate per-transaction payment of fees is possible due to micro-transaction infrastructure, which could be advantageous, as non-immediate payment models always require some form of trust from at least one of the sides. However, an interesting question is whether nodes will be prepared to forward payments at a net loss as fee differences could play a role in routing decisions. The author suggests that fees could be used as a way to incentivize people to bring channels back to equilibrium. Further payments towards one side of a channel become nearly impossible when its funds are fully assigned, so increasing fees in that direction and decreasing them in the opposite direction should incentivize people to perform more transactions that bring the channel back to equilibrium. Negative fees could even be offered for transactions that bring a channel back to equilibrium, creating a market for people making money from bringing other peoples' channels back to equilibrium. However, this would require stepping away from "net neutrality" or requiring some form of source routing and explicitly setting the fees of intermediate nodes.The author's "neutral meeting point" routing design is considered good enough; a node in the middle of the network advertises that it can benefit from a negative fee and invites people to perform transactions and share the profit. It creates two routable addresses: one for the negative-fee interface (A) and one for all other interfaces (B). Other people can then perform a payment-to-self with payee-side routing to A and payer-side routing to B. Payee-side can then have a larger payment amount than payer-side, as agreed with the meeting point, to transfer a part of the profit to the person performing the transaction.
Updated on: 2023-05-23T18:06:31.189908+00:00