Welcome to the resource topic for 2024/668
Title:
Blockchain Price vs. Quantity Controls
Authors: Abdoulaye Ndiaye
Abstract:This paper studies the optimal transaction fee mechanisms for blockchains, focusing on the distinction between price-based (\mathcal{P}) and quantity-based (\mathcal{Q}) controls. By analyzing factors such as demand uncertainty, validator costs, cryptocurrency price fluctuations, price elasticity of demand, and levels of decentralization, we establish criteria that determine the selection of transaction fee mechanisms. We present a model framed around a Nash bargaining game, exploring how blockchain designers and validators negotiate fee structures to balance network welfare with profitability. Our findings suggest that the choice between \mathcal{P} and \mathcal{Q} mechanisms depends critically on the blockchain’s specific technical and economic features. The study concludes that no single mechanism suits all contexts and highlights the potential for hybrid approaches that adaptively combine features of both \mathcal{P} and \mathcal{Q} to meet varying demands and market conditions.
ePrint: https://eprint.iacr.org/2024/668
See all topics related to this paper.
Feel free to post resources that are related to this paper below.
Example resources include: implementations, explanation materials, talks, slides, links to previous discussions on other websites.
For more information, see the rules for Resource Topics .