Are low fees good for the ecosystem but bad for (future) stakers?

#1

Imagine that there are lots people using ADA as currency and making lots and lots of ADA transactions. Imagine there are several Dapps running within Cardano which also pushes a lot messages thru Cardano, hence also paying a lot of very small fees.
Now the question. Does having a very frugal platform that make fees almost free, will make stakers loose interest?
I know that low fees will help to bring a lot of adoption to the platform and further expand the ecosystem. In some sense, this is actually critical for the project. However, this will also make stakers earn a very small percentage in therms of their holdings. I also know that there are plans to compensate the stakers for the lack of fees in the beginning, but that can’t last forever.

PS.- I am in no way asking for Cardano to be a money maker for stakers. no. no. no. I just want to have a conversation about this topic and know what other people think about this.

#2

The good news is there an equilibrium between low fees for users and high fees for miners. IOHK has game theorists on staff who’s job it is to find it!

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#3

Definitively there are people in the team caring about this economical issues. We can even see it from the formulae behind the staking fees. If the platform is to grow, this certainly need to be addressed.
I am very confused, so I feel I am not getting something right. What I am trying to relate is the marketcap (the valuation of the asset on the whole) and the amount of fees being charged. From what I gather, the higher the valuation, the less the fees but, at the same time, the more valuable those fees are.
I will keep on trying to make some sense about this, if anyone can provide further comments, please help me out.

#4

I don’t think marketcap really comes into it. But like Fred said, there are specialists employed specifically to work out all that stuff, I don’t think it’s sensible for people without such expertise to try to secondguess them.

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#5

I will be surprised if the protocol does not have some provision to dynamically adjust fees based on the relative value of Ada, Network usage etc.

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#6

This is my line of thinking as well… I feel like there should be a way to determine a goal for percentage of ADA staked at any time. As staked ADA drops below a given threshold, the fees on the network could be raised to incentivize people that aren’t staking to start.

#7

It will , but in future

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#9

Thanks for the link. Despite being very very very old it’s still pretty resourceful. (its 2 years long, but in blockchain that is like an age, hehe). Keep also in mind that this issue is shared among several blockchain projects.

So, from the article, these factors are still to be defined:

  • How expensive is one byte of computer memory?
  • How many transactions will there be on average per second?
  • How large will a transaction be on average?
  • How much does it cost to run a full node?

However, I still don’t undestand which ones will be open for the public to manage (like the cost of running a full node given that electricity costs varies from place to place) and wich factors will be determined and given from the protocol (like TPS).

It is also mention in the article that the very best of Game Theorists are working hard on these issues.

#10

I think all this will come through CIP’s, its interesting to think about for sure, if half the world was making transactions on the platform and paying fee’s to do so then those transaction fee’s will go to the accounts that are staking to secure the network, do the fee’s adjust with transaction traffic or should they be a constant? At some point I think an affordable constant would be cool, but then Cardano would be much like every other payment system and it seems staking would be very attractive as value of the cryptocurrency rises and honestly I think that with 7 nodes (Or is it 5?) securing the network right now it operates efficiently and when we move to decentralization how many do we need? should it be 1000? do we need that for decentralization? If we as a community set a goal on what the percentage should be, where do we start to come up with that number? I will be staking from the U.S. where if I set aside some ADA to stake that has a U.S. Dollar value it might possibly be way more ADA than a friend of mine in Ghana or Guatamala would consider staking just cause of the differences in our income and the economies we live in, I think I would even get into an argument with friends from Western Europe trying to come up with what type of percentage staking rewards should be, the local Value of ADA around the world is possibly going to push this movement named Shelley into a tailspin if our community is expected to figure it all out after Shelley goes live and when the Cardano project is looking to change the world its obvious we are in a hell of mess, how do you reach developing countries with your Cardano based programs if they are setup for people in the west? I know first hand that $100 dollars here in the U.S. is not the same as $100 dollars in other countries, is this something we ignore? (most likely) but then at some point all of this gets tied into how the transaction fees and staking rewards are set, luckily we do not have to figure it all out for Shelley to finish up and go live - but to become a decentralized ecosystem we are going to need to keep people thinking about how transaction fee’s will affect the platform, its security, and how to really make it different than the traditional payment systems in place now, otherwise Cardano could be ripped from the hands it is in and end up in control of instituional investors, if Bitcoin had a voting centre based on stake then I could give you a perfect example right now of how messed up things could become in a hurry.

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#11

For those in countries where using the ADA currency is too expensive to use as a currency due to fees (which the current fees are roughly 1.3 cents per transaction), ADA could be a great store of value. These users could use ADA as a means of savings and stake the network. They would earn a return just like a traditional savings account that we are accustom to in the US.

If the transaction fees become too high, there will be 2nd layer solutions such as trusted hardware and lightning network that can offer cheaper transactions.

A financial operating system is not going to cause those with large amounts of capital to no longer be wealthy. It will likely not be the only one of its kind either. The idea is that different stakeholders will have different visions. If the vision of one project becomes overly toxic, then many may choose to flee. Competition will keep stakeholders in the honest majority.

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