I know this topic has come up before, but I was thinking of a way to dynamically set prices in reference to a stablecoin. One problem is that this creates a dependency on that stablecoin, so perhaps a basket of such coins could be used and/or the reference point could be the realised fees on other major layer 1 networks -10% or so. I think ‘what you use as a reference point’ is the really thorny part of this issue.
The other side is fairly simple where SPOs could get information from an oracle or other on-chain posted data-feed to set dynamic fees to maintain both security from DDOS attacks and affordability.
I would also ask…what is the alternative? Do we manually adjust fees once a quarter with a Cardano community voting mechanism? Do we do this every month? Volatility can challenge the network on time scales far shorter than the community governance model can respond. Perhaps we simply have to make due with high cost periods in between rapid price action and community governance models to make active and manual choices for set fees.
So while a dynamic model struggles to have a non-fiat pegged reference point and that is a very ‘wicked problem’ in consultancy/corporate speak…the alternative creates a bumpy fee experience and a clogged up community governance model which continually examines fees.
I"d also point out that in reality, the community which goes through the process of voting on fees…they would basically be self-pegged to the USD or other fiat currencies they use. I wonder if there is any fundamental difference to me thinking…1-5 cents usd is a ‘reasonable’ price and voting on the fees when ADA is $10 or when ADA is $100 or whatever in the future. Fundamentally we are all likely going to be mentally pegging ourselves to some fiat reference for the foreseeable future over the next 15-20+ years at least.
If we set up a model to be pegging fees to a USD stablecoin right now to achieve a fairly constant fee of 1-5 cents per a simple cardano network transaction of sending coins from one wallet to another…then in the future when we have better stablecoins which are independent from any fiat reference, then the community could vote on replacing an old fiat pegged stablecoin basket to a new fully crypto stablecoin. That seems like a simpler model to me than voting every few weeks or months on the topic of fees.
There could even be protective rules…such that the fee will ref the stablecoins with a 24 hour average fo their price and if they all go outside of say +/- 5 cents from the 1 dollar peg…then we stop using that ref. and instead go with a fixed backup cardano fee figure until the stablecoins are accurate to within 5 cents again. So there could be a failsafe to deal with any wild fluctuations in the targeted basket of stablecoins.
Anyhow, please let me know what you think.
Do we need to vote a lot on fees as the price changes?
Is there a difference between voting with a mental peg to fiat vs a real peg to fiat/stablecoins?
Might we adopt an interim model with a peg to a basket of currencies? With Wolfram Alpha we may not even need stablecoins, we could get direct data on fait world currencies to set fees…then this reference could be replaced with a fully crypto based model in the future…meaning we only have 2 votes instead of many many fee setting votes as cardano’s price goes up and down.
Other ideas, problems, etc. I know it is not ideal to in any way tie ourselves to any type of fiat peg…so perhaps we could use an average of other crypto fees as a reference?
i.e. the bitcoin fee, the eth fee, the dot fee, etc. all averaged together in some time weighted formula to come up with a reasonable and dynamic fully crypto reference point to set cardano fees?
Thanks for reading and commenting if you do!