175 lines
7.5 KiB
Markdown
175 lines
7.5 KiB
Markdown
BSIP: 00025
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Title: Transaction Flat-Rates with Weighted Rate-Limitation
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Authors: Fabian Schuh <Fabian.Schuh@blockchainprojectsbv.com>
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Status: Draft
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Type: Protocol
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Created: 2017-10-16
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Worker: T.B.D.
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# Abstract
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Blockchain technology currently depends upon transaction fees to prevent
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spam. These fees suffer all of the known problems with
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micro-transactions and prevent blockchains from being used for low-value
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transactions, massive trading and high-rate market making. Truly
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decentralized applications must offer users the *appearance* of free
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transactions if they wish to compete with their centralized
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alternatives.
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This document proposes a protocol upgrade to BitShares to introduce
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rate-limitations for *fee-free* transactions. Since the BitShares
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blockchain is entitled to be a profitable decentralized autonomous
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company (DAC), making use of *fee-free* transactions comes at a
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*monthly* fixed cost as well as the option to lock shares away in a
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vesting balance in order to increase the standard rate at which users
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may interact with the blockchain.
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# Motivation
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Blockchains are decentralized networks where all transactions are
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broadcast to all peers. Every so often a block is produced that includes
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some or all of the pending transactions. All blockchains must find a
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solution to prevent malicious users from consuming all of the available
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network capacity with worthless transactions. These worthless
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transactions can prevent other valuable transactions from being
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processed and ultimately destroy the network.
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The solution adopted by most blockchains thus far is to charge a minimum
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transaction fee. A fee worth just a few cents is enough to make
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attacking the network expensive and unprofitable. While this approach
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solves the spam problem, it introduces new problems.
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Market making as well as micro-transactions are a highly competitive
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market. Being *decentralized* and *trust-less* alone, does not make the
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BitShares blockchain a good competitor when compared to centralized
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services.
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Despite blockchain transactions being cheaper *technically*, the fee
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that is attached to each and every transaction on BitShares results in
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some crucial businesses to be unviable, such as **market making** at
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scale, where dozens of orders are created (and canceled) continuously,
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in order to provide liquidity to the markets.
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# Rational
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In this proposal, we extend the BitShares fee model to allow
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transactions made by accounts to go through without paying a fee. We
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require accounts to be lifetime members to harness a **transaction
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flat-rate** with certain limits that can be raised by additionally
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providing BTS (units of the core asset) in a vesting balance that is
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locked away for a certain amount of time, only do be made liquid in
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weekly chunks over the whole period.
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## Full Reserve vs Fractional Reserve
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Let's view a blockchain like an Internet Service Provider (ISP) co-op
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which owns all of the cables in the town and can process a maximum
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amount of data transmission on those cables at any time. This is called
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*the capacity* of the transmission lines. People living in the town can
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buy shares in the ISP and obtain the right to utilize a portion of the
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available capacity.
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The ISP has two choices and can either run a **full reserve** or
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**fractional reserve** system.
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* Under a full reserve system each user is only allowed a fraction of
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the capacity proportional to her shares. Because not everyone uses
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the Internet at the same time, the town's network would be significantly
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underutilized.
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* Under a fractional reserve system the individual users could utilize
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more date rate than they are entitled to at any given point in time so
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long as not everyone uses the Internet at the same time.
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The problem with operating a fractional reserve is that congestion
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occurs anytime too many people wish to use the network at the same time.
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The ISP needs a way to prioritize transmissions during congested
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periods. In the most extreme case, a fully congested network must revert
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to a full reserve system.
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The challenge is setting the proper fractional reserve ratio or
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implement a **dynamic fractional reserve ratio**. Under this model the
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blockchain will
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automatically adjust the reserve ratio for the network during times of
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congestion. The blockchain will set a target utilization that leaves
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enough headroom for short term surges in demand. Any time the surges
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are sustained the blockchain reduces the maximum rate-per-share.
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When a surge is over and there is surplus capacity the blockchain can
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slowly increase the rate-per-share.
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If the time window for this control cycle is stretched too far then the
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reserve ratio will not adjust fast enough to respond to short-term
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surges, if the window is too short then clustering usage will have too
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big of an impact on normal users.
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In our estimate it should be sufficient to measure the average weekly
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transaction rate usage of users. This parameter will be changeable by
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the BitShares committee. The advantage with this approach is, that the
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BitShares committee can define whether they prefer a dynamic fractional
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reserve, where occasional uses may transact more often within a very
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short period of time, or a simple and static method, where professional
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users get an easy picture of how many transactions they may produce in a
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certain amount of time.
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## Flat-Rate Model
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In recent years, ISP providers have seen a shift in their own economics
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leaving the *pay-per-use* (e.g. per minute) service domain where users
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paid for a duration they occupied a land-line to go for a
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*pay-per-serice* flat-rate model where users paid a fixed fee to enable
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a specific service to be used for free within certain conditions (e.g.
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data volume). With the improvements in communications technology, land
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lines got replaced by fiber which can carry significantly more load.
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Thus the flat-rate model makes sense from business perspective.
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The same holds true for blockchain technologies. The Graphene framework
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is capable of incomparable transaction loads and thus, the individual
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transaction may not be tagged with a fee for the profit alone, but
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merely to prevent spam. A full reserve system gives value to a
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transaction processing capabilities of the blockchain which everyone can
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own a share of to prevent spam.
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## Flat-Rate with Weighted Rate-Limitation
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That said, we here propose a combination of the flat-rate model with a
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stake-weighted limitation of transaction rates.
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* **Flat-Rate**: A new feature is added to the blockchain that enables
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the flat-rate model with a basic transaction rate that can be defined
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by the BitShares committee (e.g. 10 transactions per day). This
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operation costs a fee and lasts for a committee-parameterized amount
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of time (e.g. 30 days). These rates are the same for every single user
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that has bought the flat-rate subscription.
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* **Stake-Weighting**: Since some users may need more than the basic
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amount of transactions per day, power users can increase the
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implicitly assumed weight of 1x to a higher value by providing BTS
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core tokens in a vesting balance locks them away for as long as the
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subscription lasts.
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This ultimately gives the option to
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* pay a fee for every transaction (current system)
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* pay for a flat-rate to transaction for fee within certain conditions
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* powerup your account with core tokens to increase fee transaction
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rate
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# Specifications
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* Do not refund order creation fee!
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* Replace Annual Fee operation?
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# Discussion
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Todo
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# Summary for Shareholders
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Todo
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# Copyright
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This document is placed in the public domain.
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# See Also
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1. [Steem Whitepaper](https://steem.io/SteemWhitePaper.pdf)
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