Re: [Bitcoin-development] A way to create a fee market even without a block size limit (2013)
El 10/05/2015 06:07 p.m., Gregory Maxwell escribió: On Sun, May 10, 2015 at 8:45 PM, Sergio Lerner sergioler...@certimix.com wrote: Can the system by gamed? Users can pay fees or a portion of fees out of band to miner(s); this is undetectable to the network. Then this is exactly what is needed. Let me explain. I know of 5 methods for a user to pay fees to a miner. I will explain each method and why these methods do not prevent the fee market from being created: 1) By transaction fees This is the standard, which would be limited by the CoVar algorithm, and would create the fee market, if it were the only way to pay fees. 2) By creating multiple transactions, each adding an output that pays to each miner (to a known miner address) the fees. User does not pre-negotiate anything with miners. This requires a transaction to have an additional output and requires sending through the p2p network one different transaction to each miner, each having an output with a known address of that miner. But the network does not propagates double-spends, so those transaction would need to be sent directly to the top miners, and to all at the same time. The IP addresses of the top miners are not generally publicly available, and then may not accept new incoming connections. Also having an additional output means the transactions would be larger, so they will score lower by any metric the miner uses to choose transactions. Last, miners must be programmed to automatically interpret payments to their addresses as fees. The resulting protocol is very difficult to do reliably, expensive, as any delay would make one miner receive the transaction from other miner and reject the double-spend that is being send directly to it, increasing the average confirmation time. 3) By adding an anyone-can-spend output for fees, so the miner can spend that output in the same block. User does not pre-negotiate anything with miners. We can hard-fork not to allow spending outputs created in the same block. This is a drawback, unless we reduce the block rate, which is my proposal. However, spending in the same block also requires an storing in the block an additional input, which consumes at least 40 bytes more, and the transaction containing the input cannot be relayed to the network in advance. Then the block that uses this method to collect fees from many transactions will propagate slower, and the miner may end loosing money. The any-one-can-spend output would take approximately 10 bytes. So if transmitting 10+40=50 bytes, cost more than the fees earned, then miners do not have an incentive to game the system. It's has been studied that each kilobyte costs an additional 80ms delay until a majority knows about the block. (Information propagation in the Bitcoin network). So 50 bytes costs 3.9 ms in propagation time, which having a a 25 BTC subsidy is roughly equivalent to 0.2 mBTC. Currently this is more than what transactions do pay in fees (about 0.1 mBTC), so this should not be a problem for at least 5 years. And again, we could just prevent spending outputs in the same block they are created. 4) Using a transaction having a single input having exactly the desired output amount plus fees and signing the input with SIGHASH_SINGLE | SIGHASH_ANYONECANPAY and adding to the transaction a single output with the desired amount. The miner will be able to join many of these transactions and finally add an output to collect all fees together, without using standard transaction fees. This is unreliable and cannot be systematically repeated without creating a pre-transaction just to prepare the single input having the amount plus fees exactly. The pre-transaction would need to pay fees, so the problem is not avoided, just moved around. 5) By negotiating out of band with the miner previously. Anything could be agreed by the user and the miner. This actually creates a parallel out-of-band market for fees, which is exactly what we want. If a user-to-miner pre-negotiation will take place, then the miner can establish whatever price policy he wants to compete and stay in business, as block data propagation costs money. So there will be two fee markets, the out-of-band market, and the in-band market, and both should converge. My conclusion is that fee markets will be created, and any alternate fee-paying methods (without a pre-negotiation) are not reliable nor cost-saving options. The full proposal would be to use the CoVar method, reduce the block rate to 1 minute, and do not allow spending outputs in the same block they are created. Best regards, Sergio. -- One dashboard for servers and applications across Physical-Virtual-Cloud Widest out-of-the-box monitoring support with 50+ applications Performance metrics, stats and reports that give you Actionable Insights Deep dive visibility with transaction tracing using APM Insight.
Re: [Bitcoin-development] A way to create a fee market even without a block size limit (2013)
Why do so many tie the block size debate to creating a fee market, as if one didn't already exist? Yes, today we frequently see many low priority transactions included into the next block, but that does not mean there is not a marketplace for block space. It just means miners are not being sufficiently tough to create a *competitive* marketplace. But who are we to say that the marketplace should be more competitive, and to go further and try to force it by altering consensus rules like the block size limit? If miners want to see more competitive fees, then they need only to alter their block creation protocol. There are many arguments for and against changing the consensus limit on block size. I'm simply saying that to force a marketplace for fees/block space should not be one of them. Let the market develop on it's own. - Stephen On May 10, 2015, at 4:45 PM, Sergio Lerner sergioler...@certimix.com wrote: Two years ago I presented a new way to create a fee market that does not depend on the block chain limit. This proposal has not been formally analyzed in any paper since then, but I think it holds a good promise to untangle the current problem regarding increasing the tps and creating the fee market. BTW, think the maximum tps should be increased, but not by increasing the block size, but by increasing the block rate (I'll expose why in my next e-mail). The original post is here (I was overly optimistic back then): https://bitcointalk.org/index.php?topic=147124.msg1561612#msg1561612 I'll summarize it here again, with a little editing and a few more questions at the end: The idea is simple, but requires a hardfork, but is has minimum impact in the code and in the economics. Solution: Require that the set of fees collected in a block has a dispersion below a threshold. Use, for example, the Coefficient of Variation (http://en.wikipedia.org/wiki/Coefficient_of_variation). If the CoVar is higher than a fixed threshold, the block is considered invalid. The Coefficient of variation is computed as the standard deviation over the mean value, so it's very easy to compute. (if the mean is zero, we assume CoVar=0). Note that the CoVar function does not depend on the scale, so is just what a coin with a floating price requires. This means that if there are many transactions containing high fees in a block, then free transactions cannot be included. The core devs should tweak the transaction selection algorithm to take into account this maximum bound. Example If the transaction fee set is: 0,0,0,0,5,5,6,7,8,7 The CoVar is 0.85 Suppose we limit the CoVar to a maximum of 1. Suppose the transaction fee set is: 0,0,0,0,0,0,0,0,0,10 Then the CoVar is 3.0 In this case the miner should have to either drop the 10 from the fee set or drop the zeros. Obviously the miner will drop some zeros, and choose the set: 0,10, that has a CoVar of 1. Why it reduces the Tx spamming Problem? Using this little modification, spamming users would require to use higher fees, only if the remaining users in the community rises their fees. And miners won't be able to include an enormous amounts of spamming txs. Why it helps solving the tragedy-of-the-commons fee problem? As miners are forced to keep the CoVar below the threshold, if people rises the fees to confirm faster than spamming txs, automatically smamming txs become less likely to appear in blocks, and fee-estimators will automatically increase future fees, creating a the desired feedback loop. Why it helps solving the block size problem? Because if we increase the block size, miners that do not care about the fee market won't be able to fill the block with spamming txs and destroy the market that is being created. This is not a solution against an attacker-miner, which can always fill the block with transactions. Can the system by gamed? Can it be attacked? I don't think so. An attacker would need to spend a high amount in fees to prevent transactions with low fees to be included in a block. However, a formal analysis would be required. Miller, Gun Sirer, Eyal.. Want to give it a try? Can create a positive feedback to a rise the fees to the top or push fess to the bottom? Again, I don't think so. This depends on the dynamics between the each node's fee estimator and the transaction backlog. MIT guys? Doesn't it force miners to run more complex algorithms (such as linear programming) to find the optimum tx subset ? Yes, but I don't see it as a drawback, but as a positive stimulus for researchers to develop better tx selection algorithms. Anyway, the greedy algorithm of picking the transactions with highest fees fees would be good enough. PLEASE don't confuse the acronym CoVar I used here with co-variance. Best regard, Sergio. --
Re: [Bitcoin-development] A way to create a fee market even without a block size limit (2013)
On Sun, May 10, 2015 at 8:45 PM, Sergio Lerner sergioler...@certimix.com wrote: Can the system by gamed? Users can pay fees or a portion of fees out of band to miner(s); this is undetectable to the network. It's also behavior that miners have engaged in since at least 2011 (in two forms; treating transactions that paid them directly via outputs as having that much more in fees; and taking contracts for fast processing for identified transactions (e.g. address matching or via an API) e.g. I'll pay you x at the end of the month for each of my transactions you process, you can poll this API. I'm aware of at least two companies having had this arrangement with miners). I think what you suggested then just further rewards this behavior as it allows bypassing your controls.-- I suspect generally any scheme the looks at the fee values has this property. -- One dashboard for servers and applications across Physical-Virtual-Cloud Widest out-of-the-box monitoring support with 50+ applications Performance metrics, stats and reports that give you Actionable Insights Deep dive visibility with transaction tracing using APM Insight. http://ad.doubleclick.net/ddm/clk/290420510;117567292;y ___ Bitcoin-development mailing list Bitcoin-development@lists.sourceforge.net https://lists.sourceforge.net/lists/listinfo/bitcoin-development
[Bitcoin-development] A way to create a fee market even without a block size limit (2013)
Two years ago I presented a new way to create a fee market that does not depend on the block chain limit. This proposal has not been formally analyzed in any paper since then, but I think it holds a good promise to untangle the current problem regarding increasing the tps and creating the fee market. BTW, think the maximum tps should be increased, but not by increasing the block size, but by increasing the block rate (I'll expose why in my next e-mail). The original post is here (I was overly optimistic back then): https://bitcointalk.org/index.php?topic=147124.msg1561612#msg1561612 I'll summarize it here again, with a little editing and a few more questions at the end: The idea is simple, but requires a hardfork, but is has minimum impact in the code and in the economics. Solution: Require that the set of fees collected in a block has a dispersion below a threshold. Use, for example, the Coefficient of Variation (http://en.wikipedia.org/wiki/Coefficient_of_variation). If the CoVar is higher than a fixed threshold, the block is considered invalid. The Coefficient of variation is computed as the standard deviation over the mean value, so it's very easy to compute. (if the mean is zero, we assume CoVar=0). Note that the CoVar function *does not depend on the scale*, so is just what a coin with a floating price requires. This means that if there are many transactions containing high fees in a block, then free transactions cannot be included. The core devs should tweak the transaction selection algorithm to take into account this maximum bound. *Example* If the transaction fee set is: 0,0,0,0,5,5,6,7,8,7 The CoVar is 0.85 Suppose we limit the CoVar to a maximum of 1. Suppose the transaction fee set is: 0,0,0,0,0,0,0,0,0,10 Then the CoVar is 3.0 In this case the miner should have to either drop the 10 from the fee set or drop the zeros. Obviously the miner will drop some zeros, and choose the set: 0,10, that has a CoVar of 1. *Why it reduces the Tx spamming Problem?* Using this little modification, spamming users would require to use higher fees, only if the remaining users in the community rises their fees. And miners won't be able to include an enormous amounts of spamming txs. *Why it helps solving **the tragedy-of-the-commons fee problem?* As miners are forced to keep the CoVar below the threshold, if people rises the fees to confirm faster than spamming txs, automatically smamming txs become less likely to appear in blocks, and fee-estimators will automatically increase future fees, creating a the desired feedback loop. *Why it helps solving the block size problem?* Because if we increase the block size, miners that do not care about the fee market won't be able to fill the block with spamming txs and destroy the market that is being created. This is not a solution against an attacker-miner, which can always fill the block with transactions. *Can the system by gamed? Can it be attacked?* I don't think so. An attacker would need to spend a high amount in fees to prevent transactions with low fees to be included in a block. However, a formal analysis would be required. Miller, Gun Sirer, Eyal.. Want to give it a try? * Can create a positive feedback to a rise the fees to the top or push fess to the bottom? *Again, I don't think so. This depends on the dynamics between the each node's fee estimator and the transaction backlog. MIT guys? *Doesn't it force miners to run more complex algorithms (such as linear programming) to find the optimum tx subset ? *Yes, but I don't see it as a drawback, but as a positive stimulus for researchers to develop better tx selection algorithms. Anyway, the greedy algorithm of picking the transactions with highest fees fees would be good enough. * PLEASE don't confuse the acronym CoVar I used here with co-variance.* Best regard, Sergio. -- One dashboard for servers and applications across Physical-Virtual-Cloud Widest out-of-the-box monitoring support with 50+ applications Performance metrics, stats and reports that give you Actionable Insights Deep dive visibility with transaction tracing using APM Insight. http://ad.doubleclick.net/ddm/clk/290420510;117567292;y___ Bitcoin-development mailing list Bitcoin-development@lists.sourceforge.net https://lists.sourceforge.net/lists/listinfo/bitcoin-development
