sipa changed the topic of #bitcoin-wizards to: This channel is for discussing theoretical ideas with regard to cryptocurrencies, not about short-term Bitcoin development | http://bitcoin.ninja/ | This channel is logged. | For logs and more information, visit http://bitcoin.ninja
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<bsm1175321>
It strikes me that miners always have an effective "discount" on fees they submit as transactions, because a certain fraction of the time they will mine their own transactions and get their own fees back. So, it's always in their best interest (and ability) to push fees as high as they can make them.
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<bsm1175321>
Perhaps there's a net equilibrium when only miners are participating...
<bsm1175321>
Anyway, this is a rather perverse game.
<aj>
bsm1175321: they still "pay" the fee in the form of reduced income. getting the fee back just nets to zero (at best) for them, forwarding someone else's transaction nets to +12000 satoshi or whatever
<adlai>
aj: the argument is that getting the fee back nets +EV by raising the fee floor, although proving this beyond rational doubt seems a challenge
<bsm1175321>
Point is, this game needs a more serious analysis. And I don't like this game...the point of tx fees should be to prevent usages with a net cost to the ecosystem.
<bsm1175321>
Every example I know of with a tx fee results in a cartel/corruption and raising the fee to the highest allowed by law. (Consider: ATM fees, real estate agent fees, etc)
<adlai>
sadly game theory is almost as young a science as ledger distribution technology!
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<bsm1175321>
I think there might be a way to take tx fees and prevent the "tragedy of the commons" while avoiding the game involved in taking the fee. e.g. coin destruction in favor of a fixed block reward. That way the games are unlinked.
<adlai>
vmmmmmmm
<adlai>
sorry. keyboard needs replacement.
<adlai>
wouldn't coin destruction + infinite disinflation (a la 'woodcoin') lose long-term to a system that had coin destruction + finite disinflation?
<aj>
adlai: as a miner you can "raise the fee floor" for your blocks directly by just refusing txs with lower fees or soft-limiting your block size
<adlai>
sure, that's not the argument.
<adlai>
the argument is about "manipulating" (ie, non-coercively fooling) customers of the fee market into paying more than necessary
<aj>
adlai: stuffing fake transactions can add to that if you can confuse how people estimate fees (eg, if you took the average or nth percentile of recent blocks), but i don't think that would confuse the core coin estimator
<adlai>
please don't direct criticism of this argument at me, i don't agree with it myself
<bsm1175321>
A key assumption here is that the "real" market submits more transactions than miners and so sets the price. This is obviously not true. Miners can easily flood the system with transactions. The game theory is not so simple.
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<aj>
bsm1175321: anyone can flood the market with transactions (and anyone can mine, too), how are you differentiating "miners" txes from "real" ones?
<aj>
bsm1175321: if you say "unpublished txes prior to finding a block", then i don't think those influence core fee estimation
<bsm1175321>
I'm just saying it's an assumption one might mistakenly make in trying to figure out the game theory here...
<adlai>
my problem with the floor-raising argument is that "patient" users (ones who care about the floor, rather than the ceiling) sh/would be patient enough to submit their first attempt below the floor of on-chain fees, maybe even below the floor of the (deeeeep!) mempool, and bump gradually enough to allow time for all miners to have seen the tx
<aj>
bsm1175321: if you have some other measure, then other miners can claim the fees from those transactions, so they're not free
<bsm1175321>
"patient enough" may be infinite, while miners play games with each other.
<adlai>
it's finite, limited by (not 'physics' this time...) their ability to mine their own transactions
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<bsm1175321>
A miner knows which transactions are his, and will always choose to mine his transactions, so as to regain his fees.
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<bsm1175321>
It is when you can do both by transaction selection. You can mine a block containing only your transactions...or mine a few from those willing to rise above your price floor. Every miner can do this and therefore set the price floor arbitrarily high. There is no downward price pressure.
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<aj>
bsm1175321: downward price pressure comes from fewer people using bitcoin -- if you started with n people and fees of f, you get n*f revenue; if you increase fees by x, you get (n-k)*(f+x). eventually k becomes large enough that that's lower than n*f
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<aj>
bsm1175321: at no point do you need to mine your own transactions to make that happen though
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* adlai
reformulates this in limit order book terms: buyers of block space can broadcast offers to fill it at a specific price. producers of block space can broadcast proposed use of block space, effectively filling offers that pass their sell price.
<adlai>
if a proposal for blockspace uses too high a price, some other producer of blockspace can make a competing proposal, which effectively 'steals' from the rejected producer
<adlai>
not a nice game, but it seems to work.
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<qpm>
tx:<Jeremy_Rand> wasi: any chance HTTPS could be enabled for mimblewimble.cash ?
* adlai
thought it was trusted setup through trusted hardware?
<nsh>
i'm not sure that's even a thing
<nsh>
well, i guess you could fabricate an ASIC just for this purpose that destroys the CRS backdoor but probably it would just add even more complexity meaning even more places something sneaky could happen
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* adlai
must lunch, but hopes to return to context for "CRS backdoor"
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<fluffypony>
adlai: Common Reference String
<nsh>
.wik Common reference string model
<yoleaux>
"In cryptography, the common reference string (CRS) model captures the assumption that a trusted setup in which all involved parties get access to the same string crs taken from some distribution D exists. Schemes proven secure in the CRS model are secure given that the setup was performed correctly." — https://en.wikipedia.org/wiki/Common_reference_string_model
<nsh>
zcash is perfectly anonymous, but at the cost of it being perfectly possible for anyone who manages to retain the backdoor key to perform unlimited undetectable fraud (modulo consequences of inflation)
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<nsh>
has anyone heard of any studies on side-channel eliminating guest OS virtualisation layers?
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<nsh>
'This implementation of Zcash is not resistant to side-channel attacks. You should assume (even unprivileged) users who are running on the hardware, or who are physically near the hardware, that your zcashd process is running on will be able to: {badthings...}'
<nsh>
but you can eliminate all of the side-channels theoretically at the cost of losing the caching benefit that enables them
<nsh>
it'd be nice if some work were done on this to determine the performance penalties for various common [ECC] crypto operations relative to common virtualisation solutions
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<bsm1175321>
adlai: but there are no "producers of block space". It's a fixed (artificially limited) resource. Space in the block has zero cost if it's not full.
<bsm1175321>
This game would be easier if higher tx fees could result in larger blocks.
<bsm1175321>
This supply is completely inelastic, IOW.
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<belcher>
yep, its like land in new Manhattan, the only way is to build skyscrapers (LN, cut-through, MAST, etc)
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<bsm1175321>
The "deep mempool" is inherently exclusionary: the participants on the loosing tail of transactions are those who must choose to forgo sending a transaction at all.
<bsm1175321>
Assuming participants can bump their transaction fees, some of those who do not get into blocks will bump fees until they do. (The only reason transaction fees have not risen faster on Bitcoin is that this is technically hard to do currently)
<bsm1175321>
But for participants unwilling to pay the transaction fee when it rises, they also need tools to "cancel" their transaction. These tools do not exist AFAIK.
<bsm1175321>
These lower-fee transactions are in a permanent limbo: they *might* be mined in the future, so the funds are considered spent by the user's wallet.
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<bsm1175321>
The only way to "cancel" a mempool transaction on Bitcoin is to double-spend the same output, but to do that, the user has to again pay this transaction fee that he has decided is too high.
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<belcher>
doesnt the lack of easy RBF actually increase fees? since people who require fast confirmations will over-pay because they cant easily bump the fees if they paid too low
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<Taek>
So, I think I understand this deep mempool thing better now
<Taek>
basically, you end up with an infinitely growing mempool, but also the ability to add transactions to blocks with very high certainty
<Taek>
all you have to do is release multiple transactions
<Taek>
one that you intend to confirm, and then some lower fee transactions that you intend to leave in limbo indefintiely
<Taek>
The only reason you need transactions in limbo is so that the miners have incentive to not fork eachother
<Taek>
but there's no reason that those transactions/fees have to correspond to actual transactions
<Taek>
it's basically a tithe
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<Taek>
And the tithe that you need to submit is proportional to the fee that you're trying to put on the actual transaction
<Taek>
so the tithe per transaction is ~constant, but the tithe pool is constantly growing