Scaling Transaction Fees

Edit: see [Proposal] Fixed transaction price: USD 0.01 for a more fleshed out proposal. Thank you!

Hey all,

This is just an idea, I want to open a discussion about it. I am hoping you can help me flesh out this idea. Maybe it’s already been discussed.

Right now I believe we all pay, what, .0001 ICP with every transaction for a fee. Is that right? It’s very low, we love that. But first off, can that fee be changed via NNS?

I think everybody here wants to see more ICP burned. My idea is that we could set the burn fee at a constant $USD amount, maybe $.01 per transaction. Something very low. But when price is low, that burn fee is greater in terms of ICP.

Right now we have a similar system with cycles, where at low prices more ICP need to be burned to obtain the same amount of cycles.

The advantage here is that at low prices, people would be burning more ICP in their transactions, which could help (very marginally) to support price at these low levels. And if price ever did fall to, say, $.03 (people like to joke that we’ll fall back to VC price) we would see lots of ICP burned.

Thoughts? The main idea is this: the transaction burn fee could be changed to be a constant $USD (or cycles) amount.

Thank you.

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For days I have been thinking about a dynamic transaction pricing system, whether related to cycles or a fixed sum.
This makes a transaction come out the same when the token was worth 50 that it is currently worth 5 and when it is worth 500 it comes out the same.

I’d be surprised if a research team hasn’t thought of all the possible ways to motivate burning, I think they already have… That’s why I didn’t post my thoughts, I think they already thought about everything and everything has a logic.

It could also be used to reduce volatility. If the price is very low ($5) it generates an extra burn by increasing the price, if the price is very high ($1000) it generates less icp burned per transaction.

Maybe someone from the team can comment on thoughts about it. @dieter.sommer @THLO @domwoe @diegop :smiling_face_with_three_hearts: :raised_hands: the work they do is appreciated!!

Thank you very much !

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That’s correct, every (ledger) transaction costs/burns 0.0001 ICP.
And yes, it would be possible to implement a different strategy for transaction fees and create an NNS proposal to change the behavior (if the proposal gets accepted).

@bogdanwarinschi can certainly say more about this but one advantage of (and reason for) the current fixed fee is that it is simple. No interaction with the cycle minting canister is required to determine the fee.

Personally, I don’t think changing the ledger transaction fee to a constant value in fiat terms would increase the burn rate considerably because transactions are and should remain cheap. As you can see on the dashboard, less than 0.5% of all ICP is burned in transactions, so even a tenfold increase would not change the burn rate dramatically.
But I’m happy to read about other perspectives and ideas.

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Thanks for the compliment but I’m very sure that we haven’t thought of everything - and any input that helps us and the community to improve the Internet Computer is greatly appreciated! :slight_smile:

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Thank you very much for the reply! So I am going to continue with my analyzes that I have been carrying out to model the idea. I’ll share them later on the forum. Thank you !

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Thank you for your work on the idea, @FranHefner!