If we consider the analogue of a transaction being the movement of an asset from point A to B, the associated movement costs are set by those responsible for the asset transportation within the blockchain: the miners. Similarly, there are associated asset storage costs on chain. This in turn creates a market lead price for the execution of asset trades, contracts and storage. Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform.
When this is scaled with increasing utilisation of complex mechanisms, such as smart contracts, the gas price inevitably increases relative to computational requirements. Without a systematic method of control, the price can be subject to malicious market forces which are detrimental.
Over the last month, Ethereum’s gas prices have been surging almost as fast as the banks are printing money through Quantitative Easing. The average gas price increased 3X since the start of May. Network congestion seems to be the primary issue. However, what’s causing network congestion is interesting as according to a Twitter user, it’s an MMM scheme.
Ethereum is going through a major shift in its inner workings. In fact, it wouldn’t be an overstatement to say that Ethereum is evolving, especially, considering its delayed shift from PoW to PoS. While those plans have met a lot of headwinds, it seems underway nevertheless.
There are also some mechanisms being experimented with relating to Stateless Ethereum; whereby block witnesses, that have special data sufficient to execute all transactions inside a received block, are distributed.
As seen in the above chart, the gas prices rose from 0.14 Gwei to 0.30 Gwei between 1 May and 15 May. The median transaction fee also increased from $0.069 to $0.244, a 253% increase.
One such actor, according to Taylor Monahan, CEO of MyCrypto, was FCoin. A China-based exchange, FCoin had previously drawn attention due to its novel revenue model, which involves distributing free tokens to users trading on the platform. As detailed by CoinDesk, the model proved popular, having led the exchange to 24 hour trading highs of $5.6 billion, a figure that vastly exceeded the top exchanges on CoinMarketCap combined.
- On the Ethereum blockchain, gas refers to the cost necessary to perform a transaction on the network.
- Miners set the price of gas and can decline to process a transaction if it does not meet their price threshold.
- Gas prices are denoted in gwei, with are worth 0.000000001 ether.
- Gas prices can be manipulated
Nervos CKB proposes a solution that separates costs for storage and computation. The costs associated with storage are absorbed by inflationary characteristics and are indirect.
When a CKByte is owned and used on blockchain the inflationary aspect of the system, in effect, replaces the gas cost. Users are able to protect their unused tokens within the Nervos Dao which compensates at the rate of dilution by secondary issuance (3.38% APR equivalent at the time of writing).
It is imperative for the computational model to be efficient as this reduces costs and energy. With a strong computational model, Nervos CKB on-chain actions require less computation, and therefore less gas in general.
With a higher throughput capacity by design via multiple technical innovations, Nervos CKB along with the power of Lina Mainnet is able do more with the same amount of resources as other blockchain systems. This translates to substantially less upward pressure on gas costs.
Fees on Nervos CKB
Transaction fees on Nervos are similar to Bitcoin, an additional amount included in the transaction to compensate the miner. State rent is also paid to miners for state storage. This is done through additional issuance that functions as an inflation of the user’s CKB being used to store data.
Nervos CKB has three types of fees;
- Cycles are fees paid to miners based on the amount of computer resources that are used to verify a transaction. These are measured by CKB-VM during the execution of any smart contracts in a transaction.
- Transaction Fees are paid to miners for providing the computing power that provides security to the network.
- State Rent is paid to miners for providing storage space to persist the data in a transaction.
The division of fees means that charges are more accurately calculated based on actual usage. On Nervos, there is less direct pressure on upfront transaction fees because throughput capacity is higher and miners have state rent as a secondary incentive which is paid indirectly through inflation.
A Cost for Storage
On almost all blockchains, writing to storage is free and data will be stored by full nodes forever, this is unsustainable in the long term. Storage cost is an integral element of a blockchain design, if it is missed on day one it’s difficult engineer-in at a later point and would adversely disrupt the ecosystem. This can be a reason for a community project to turn towards a stateless client instead of imposing state rent. Stateless clients workaround the state bloat issue, but do introduce new problems such as data availability requirements on users, higher network bandwidth usage, etc.
Nervos CKB addresses this from day one, by requiring that users own the state space they occupy and by paying miners issuance rewards based on the amount of state occupied on the blockchain.
Lina Loves Efficiency
- On Nervos, failed transactions make a block invalid. Miners can clearly identify invalid transactions and will not include them in blocks, since only valid transactions are executed on-chain throughput is improved and users never pay fees for failed transactions.
2. Nervos allows for multiple users to collaborate in creating a transaction. By combining state updates from different users to be processed in a single transaction, throughput is also improved. On-chain actions require less computation, and therefore less gas in general.
3. Because Nervos is similar to a UXTO-based chain, transactions can be validated by nodes simultaneously. Only one read and write to disk operation is required for each block. The network’s bandwidth is the limiting factor and not the amount of computation that can be processed on nodes or disk I/O, this in turn lowers the cost of adding data and modifying data on-chain.
Economics · Nervos CKB
The CKByte is the native token of Nervos, and it is used to pay for the three types of fees that exist: Cycles…
Nervos DAO Explained
The Nervos DAO allows users to lock CKBytes (that are not being used) and receive rewards from secondary issuance.