Transaction fee factors to consider

Listing the different transaction fee factors that will be considered for each transaction fee approach

The following are some relevant factors for consideration to help compare the different transaction fee approaches. An approximate score will be added against each transaction fee approach with a rationale behind the score for each of the different factors. The scoring for each factor will range from 1 (very bad) to 5 (excellent). The importance of each factor is also rated out of 5, where 1 is not important and 5 is very important. This importance will be used to determine a final overall score. As an example, a moderately important factor (3) could be represented as a 60% importance value, if one approach received a score of 5 for one factor this value can then be multiplied by the factor importance (0.6) to generate a final score of 3 (0.6 importance * 5 score).

Taxation fairness

  • Description - Community members in any ecosystem will want to be treated fairly in relation to how much fees they are paying to help operate and maintain the network against what other people are paying.

  • Importance score - 5, Very important. If a network is unfair to certain community members it could result in an increasing area of conflict within the ecosystem over time. Unfair transaction fees could create an opportunity for competing networks to emerge that provide fairer fees.

  • Scoring questions - How fair is this transaction fee approach for different stakeholders in the ecosystem? How does the fee approach impact poorer and wealthier community members?

  • Scoring - High fairness is good (Score - 5). Low fairness is bad (Score - 1).

Incentive complexity

  • Description - The approach used for transaction fees could influence how people act and use the network due to the incentives that the transaction fee approach being used might have presented them.

  • Importance score - 5, Very important. The transaction fee approach could lead to inefficiencies in how users create transactions and potentially create undesirable user behaviours due to the incentives that have been put in front of them.

  • Scoring questions - What behaviours or usage patterns could the transaction fee approach cause? Are the incentives beneficial to the community members or the overall utility of the network?

  • Scoring - Low complexity is good (Score - 5). High complexity is bad (Score - 1).

Network risks

  • Description - The transaction fee approach could introduce a number of potential network risk factors that need to be managed or resolved.

  • Importance score - 5, Very important. A network that is designed to support millions of users needs to be sufficiently robust to survive in different usage conditions and suddenly changing market dynamics. Any lack of network stability could result in a reduced amount of trust in the sustainability of the network.

  • Scoring questions - How would the network be impacted by different usage patterns and sudden changes? Could the fee approach jeopardise the stability of the network?

  • Scoring - Low risk is good (Score - 5). High risk is bad (Score - 1).

Game theory risks

  • Description - Stakeholders could look to exploit the transaction fee approach to minimise the fees they pay or to harm other users or the wider network.

  • Importance score - 5, Very important. A network will need to consider how different actors could behave or exploit the transaction fee approach to try and financially benefit themselves or to harm the network.

  • Scoring questions - How could different actors potentially exploit the transaction fee approach to benefit themselves or to harm the network? How easy would it be for that actor to achieve this outcome on an ongoing basis due to the fee approach?

  • Scoring - Low risk is good (Score - 5). High risk is bad (Score - 1).

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