Hey @nickvasilich,
While I agree with you that it’s better to have more input to make the proposal more convincing, I suppose that everyone who read the topic would have agreed that the current network fee is non-sense low, that’s unhealthy as network validators are rewarded by only inflated mining rewards and product market fit couldn’t also help PRV demand if the fee is super that low. Let me clarify a few points here to back the statement up:
Let’s say there are 3 main participants in Incognito: end-users, network validators and arbitrage bots. Given the 0.1 PRV network fee that is worth about 2 cents now:
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I don’t think there will be any end-users complaining about the 2 cents fee they have to pay for a privacy transaction.
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Network validators pay for the hardware to operate the network. Let’s only talk about storage here, because a privacy transaction takes about a couple of kilobytes compared to 300 bytes of Bitcoin transaction so Incognito chain would require much more storage space than other public blockchains, we believe transaction initiators (both end-users and bots) need to pay network validators in direct (5% of network fee as proposed) or indirect (higher PRV demand) way for the storage facility. Also, that’s true that we stated that the very low network fee is one of the advantages of Incognito, however, the current network situation is much different from what we saw 3 years ago (when you were in the team) which the storage size of the whole blockchain data is just a few gigabytes back then but it’s hundred of gigabytes now.
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With the proposed fee, arbitrage bots will need to adjust their strategy to take the new network fee into account for an arbitrage transaction (rather than creating transactions aggressively for even a very small arbitrage opportunity). Actually, we used to see the bots willing to pay a very high trading fee in Incognito to compete with each other for an attractive opportunity. Please don’t get me wrong, arbitrage bots are also needed for rebalancing markets, so their existence is not always bad (and inevitable) but they have to pay fairly network validators as well.
Regarding spam prevention, let’s do some math to see the difference in the needed PRV for a spammer to flood the network per day:
Old: (86400 / 20) * 100 * 8 * 0.0000001 = 0.3456 PRV
New: (86400 / 20) * 100 * 8 * 0.1 = 345,600 PRV
Where 86400 is number of seconds per day, 20 is blocktime, 100 is max number of transactions per block, 8 is number of shards, 0.0000001 and 0.1 are old and new fees respectively. So isn’t it economical spam prevention, is it? (we would need additional methods for spam prevention for sure)
In my personal opinion, most mindful Incognito supporters would agree that increasing the network fee is needed then the more reasonable concern is what fee in PRV should we set. To be honest, we are proposing 0.1 PRV as an initial one mostly based on PRV’s current price so that the new fee won’t hurt any above participants too much. So 0.1 PRV network fee is a starting point (mostly for spam prevention) and it will be market-driven which the community won’t need to adjust regularly. Maybe only in cases of PRV price “abnormal” increase or decrease that leads to unreasonably high or low network fee in $ then we would need to vote for an adjustment. (“abnormal” means the change of PRV price isn’t the result of a change in number of transactions in the network)
Hope my comment could clarify a few points for the proposal and if there are any other inputs you think we should add, feel free to comment below. Thanks.
What you said will just cause the centralization. First of all, in an ideal environment, the app (just a frontend) and the blockchain (backend) should be developed by separate teams (like in Ethereum or other major chains). In fact, there may be many wallet apps but the blockchain will ever be only one. Your request can be implemented in two ways:
