{"type":"rich","version":"1.0","author_name":"npub1m230cem2yh3mtdzkg32qhj73uytgkyg5ylxsu083n3tpjnajxx4qqa2np2","author_url":"https://nostr.ae/npub1m230cem2yh3mtdzkg32qhj73uytgkyg5ylxsu083n3tpjnajxx4qqa2np2","provider_name":"njump","provider_url":"https://nostr.ae","html":"📅 Original date posted:2022-07-11\n📝 Original message:On Mon, Jul 11, 2022 at 11:12:52AM -0700, Bram Cohen via bitcoin-dev wrote:\n\u003e If transaction fees came in at an even rate over time all at the exact same\n\u003e level then they work fine for security, acting similarly to fixed block\n\u003e rewards. Unfortunately that isn't how it works in the real world. There's a\n\u003e very well established day/night cycle with fees going to zero overnight and\n\u003e even longer gaps on weekends and holidays. If in the future Bitcoin is\n\u003e entirely dependent on fees for security (scheduled very strongly) and this\n\u003e pattern keeps up (overwhelmingly likely) then this is going to become a\n\u003e serious problem.\n\u003e \n\u003e What's likely to happen is that at first there will simply be no or very\n\u003e few blocks mined overnight. There are likely to be some, as miners at first\n\u003e turn off their mining rigs completely overnight then adopt the more\n\u003e sophisticated strategy of waiting until there are enough fees in the\n\u003e mempool to warrant attempting to make a block and only then doing it.\n\u003e Unfortunately the gaming doesn't end there. Eventually the miners with\n\u003e lower costs of operation will figure out that they can collectively reorg\n\u003e the last hour (or some time period) of the day overnight and this will be\n\u003e profitable. That's likely to cause the miners with more expensive\n\u003e operations to stop attempting mining the last hour of the day preemptively.\n\u003e \n\u003e What happens after that I'm not sure. There are a small enough number of\n\u003e miners with a quirky enough distribution of costs of operation and\n\u003e profitability that the dynamic is heavily dependent on those specifics, but\n\u003e the beginnings of a slippery slope to a mining cabal which reorgs everyone\n\u003e else out of existence and eventually 51% attacks the whole thing have\n\u003e begun. It even gets worse than that because once there's a cabal\n\u003e aggressively reorging anyone else out when they make a block other miners\n\u003e will shut down and rapidly lose the ability to quickly spin up again, so\n\u003e the threshold needed for that 51% attack will keep going down.\n\u003e \n\u003e In short, relying completely on transaction fees for security is likely to\n\u003e be a disaster. What we can say from existing experience is that having\n\u003e transaction fees be about 10% of rewards on average works well. It's enough\n\u003e to incentivize collecting fees but not so much that it makes incentives get\n\u003e all weird. 90% transaction fees is probably very bad. 50% works but runs\n\u003e the risk of spikes getting too high.\n\u003e \n\u003e There are a few possible approaches to fixes. One would be to drag most of\n\u003e east asia eastward to a later time zone thus smoothing out the day/night\n\u003e cycle but that's probably unrealistic. Another would be to hard fork in\n\u003e fixed rewards in perpetuity, which is slightly less unrealistic but still\n\u003e extremely problematic.\n\u003e \n\u003e Much more actionable are measures which smooth out fees over time.\n\nNote that a tricky thing here is that smoothing out fees is made difficult by\nthe fact that users can by-pass the fee system by including anyone-can-spend\noutputs in their transactions. Or worse, by simply paying large miners\nout-of-band to get their txs confirmed. So any smothing scheme that tries to\nsmooth the market-based fees we already have will fail.\n\nThe only type of fee-smoothing scheme that is feasible is to smooth an entirely\nseparate category of fees that are made mandatory. For example, you could\nachieve the economic impact of inflation by having a fixed value*time based fee\nthat goes to timelocked anyone-can-spend outputs in the coinbase to push the\nfee forward to other miners.\n\nDoing this is of course a gigantic accounting headache, and problematic for\nexisting L2 protocols, because you are reducing the value of txouts as they age\n(demurrage). But at least it's a soft-fork.\n\nInterestingly, if you look at transaction fees in blocks right now, people\nregularly pay far higher transaction fees than necessary. There seem to be a\nbunch of high value users, eg $1 million txs, without terrible fee estimation.\nAnd I suspect the reason why this happens is simply that for a $1 million tx,\noverpaying 100x with a $100 tx fee is irrelevant. Of course, this is also a\nproblem from the re-org point of view...\n\n\u003e Having\n\u003e wallets opportunistically collect their dust during times of low\n\u003e transaction fees would help and would save users on fees.\n\nYou're assuming wallets will even have dust to collect. With widespread use of\nLightning that will likely not be true. Indeed, with sufficiently efficient L2\nsolutions it's really unclear as to how much demand there will be for block\nspace.\n\n-- \nhttps://petertodd.org 'peter'[:-1]@petertodd.org\n-------------- next part --------------\nA non-text attachment was scrubbed...\nName: signature.asc\nType: application/pgp-signature\nSize: 833 bytes\nDesc: not available\nURL: \u003chttp://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20220711/6626ac18/attachment.sig\u003e"}