Percentage demand fee

A proportional fee increase for all transactions when the networks demand is too high

A demand fee is an additive fee model that can be used on top of the other fee approaches (fixed fee, percentage fee or fixed & percentage fee). A demand fee means that the network would dynamically increase the transaction fee amount when the load on the network becomes too high or when it has gone beyond what it can handle. A percentage demand fee means that the fee would be increased proportionally alongside the value of the transaction. Demand based fees can be an effective approach for better balancing the demand within a network as users would be incentivised to avoid the demand based fees and use the network when it is cheapest to do so. Demand based fees can also be an effective way for increasing the amount of income the network receives to pay for node operators. For horizontally scalable networks the demand fee income could be used to directly incentivise more node operators to come online. Percentage fees are recommended as if this was a fixed fee the richest individuals in the network would be getting a proportionally cheaper fee on an ongoing basis compared to the value of the transactions they are making. This means they could more easily prioritise their transactions on an ongoing basis in the network.

Very high taxation fairness (Score - 5)

Demand based fees can help to balance the future demand on the network as people will use the network when it makes most sense to do so for their own use case. Percentage based demand fees mean that a user would pay an increased fee proportional to the value of the assets they are transacting with. This avoids the issues that a demand fixed fee approach would have where the wealthiest individuals would get the lowest percentage cost basis. All users would be treated equally as the transaction fees they pay would be proportional to the value of their transactions.

Moderate incentive complexity (Score - 3)

Everyone would proportionally be paying an increased amount for their transactions if the network demand exceeded a certain threshold. The higher the demand based fee, the more that there is a potential incentive for wealthier individuals to make smaller transactions that could bloat the network if that behaviour was able to give them any form of financial benefit. Higher demand based fees would likely increase the amount of people that look to avoid these fees by delaying their transactions. Horizontally scalable networks could help to minimise this risk of people bloating the network for financial gain by ensuring that any demand based incentives are effective at bringing more nodes online that help to increase the transaction throughput of the network.

Moderate network risks (Score - 3)

A demand based fee helps to reduce network risks by adjusting the fees based on the demand in the network. This creates a higher cost for attackers who want to bloat the network and creates a direct incentive for users to balance the load of transactions over a longer time period to avoid these increased fees. By itself this approach still has a moderate amount of network risks as the percentage fee approach would still likely require a minimum fixed fee to prevent wealthier individuals from being able to easily spam the network.

Moderate game theory risks (Score - 3)

Malicious actors would need to pay an increased fee to continuously try and attack the network for submitting many transactions. The fee amount will influence whether an attack is profitable or not for an attacker and how long they can financially sustain the attack. This fee approach would likely require some form of minimum fixed fee to help with preventing actors from maliciously abusing the percentage based fee. The more scalable the network is the less that this minimum fixed fee would need to be.

Total score = 14 / 20