Fixed & percentage fee

A combination of both fixed fee and percentage fee approaches

A combination of fixed fee and percentage means that every transaction would have a certain amount that is a fixed fee and the remaining fee is percentage based. The reason that this approach could be effective is the fixed fee would represent a minimum fee that can help with ensuring the network is sustainable and stable when people try to submit a large volume of transactions. This is needed as a percentage fee approach has the risk that the users could overload the network with cheap transactions to congest the network. A minimum fixed fee approach helps to protect the network against this behaviour by ensuring that the fixed fee is high enough to pay for the hardware and operating costs that are required to run the network during these periods of high usage and transaction volume. Adding the percentage fee on top of this helps to ensure that the wealthiest individuals pay a proportional share of the tax based on the amount of wealth they are transacting with. This combination approach ensures the stability of the network using a minimum fee and combines it with the fairness of proportional percentage based taxation fees.

High taxation fairness (Score - 4)

People are taxed based on the amount of value they are sending across the network. A percentage approach scales to treat all levels of wealth equally. People would pay fees relative to the wealth that they transact with when using the network. Everyone would nearly pay proportionally the same amount based on the value of assets they transact with. The minimum fixed fee does result in the poorest individuals paying more in tax as the fixed fee will proportionally increase their taxation rate. This reduces the fairness of this combined approach as it means there is still a benefit for the wealthiest individuals who would proportionally pay slightly less tax than poorer individuals. This factor increases the importance of creating highly scalable systems that can greatly reduce their minimum fixed fee. The lower the minimum fixed fee the more egalitarian and fair the taxation system becomes as the proportional percentage fee would increasingly represent the majority of the taxation amount.

Low incentive complexity (Score - 4)

Each community member will pay the same fees relative to the value of the assets that they are transacting with as well as the minimum fixed fee per transaction. This creates an incentive for people to not move their assets around unless that transaction will provide them sufficient value. Users transacting with the same value of assets would pay the same fee. This fee approach helps to make a similar experience for users when making transactions as they will be a proportional amount in taxation. The minimum fee does give wealthier individuals a slight advantage as their proportional taxation amount will be slightly lower. Wealthier individuals could have some incentive to take advantage of the fact that the minimum fixed fee gives them a taxation advantage compared to poorer individuals. The lower the minimum fixed fee is the less that this is an issue.

Low network risks (Score - 4)

The minimum fixed fee would protect the network from bad actors being able to spam the network to degrade the network performance. Bad actors could still try to do this but the cost of the attack would be much higher due to the usage of a minimum fixed fee. Over the long term wealthier individuals would also be paying a proportional amount of taxation based on their wealth. This usage of percentage fees as well as a minimum fixed fee helps to ensure the wealthy individuals are not given an advantage over poorer individuals. There is still a small risk that the minimum fixed fee gives a small advantage to wealthier individuals over time and this leads to more concentration of wealth. The smaller the minimum fixed fee is the lower the risks are for the network in terms of giving wealthier individuals an advantage. The percentage fee approach would help to ensure there is a long term viable solution for generating enough tax for the ecosystem to pay for validators and any maintenance and improvement of the network.

Very low game theory risks (Score - 5)

Bad actors would not be able to spam the network with transactions cheaply due to the minimum fixed fee. Wealthier individuals would also not be able to exploit the network as easily by submitting multiple transactions as they would have to pay a proportional percentage fee based on the amount of wealth they were transacting with. Providing the minimum fixed fee is sufficiently high enough to maintain network stability there is a relatively low risk that the network will be degraded for any long period of time due to the costs involved in attacking the network from both a transaction volume perspective as well as a wealth based transaction one.

Total score = 17 / 20