Ethereum’s Vitalik Buterin Shares Potential GAS Price Stabilizing Solution
This has not been a good summer for ETH gas prices, which have been increasing. While there have been recommendations as to what can be done to lower prices, one interesting one as made by Ethereum co-founder Vitalik Buterin.
At the current state, Ethereum and Bitcoin give buyers the opportunity to choose the prices that they are able to afford. The prices also includes the fee, making it easier for buyers to ultimately choose a rate that they are comfortable with. The trouble with this method though is that there is no motivation to post fees higher than the average rate, which may mean that the transaction does not always go through. As Buterin states,
“If you value a transaction getting included right now at $1, you would be willing to bid anything up to $1, but if everyone else is bidding $0.05, then you could keep more money by bidding $0.08 instead.”
Accordingly, fee volatility ensures for Ethereum, which features thousands of dApps running on it. The apps require transactions be processed and with the fee, volatility can increase.
To overcome the aforementioned volatility, Buterin issued a proposal. In a Twitter post, he stated, “One proposal for improving stability and user-friendliness of gas price markets” is to allow users to bid a price that they are willing to pay to have the transaction included. This type of approach allows the lowest fee the miner accommodates to be applied for everyone.
One proposal for improving stability and user-friendliness of gas price markets: https://t.co/1AXsan7u9c
Not dependent on Casper, sharding or abstraction; if well reviewed and people agree it's a significant improvement, it could technically be implemented as a change to mainnet
— vitalik.eth (@VitalikButerin) July 2, 2018
Of course, this approach is not without issues. First, miners can spam higher transactions, which may increase the price. Second, miners can plot with transactions, which may cause an increase in the bid and a refund of the difference.
Overall though, the mining transaction fee is preserved and miners can’t impact the price to change so that their earnings increase. Rather, users can specify a minimum amount of blocks they want the transaction to occur in. Those who are considering this method may also want to take into account that transaction fees are necessary to provide miners with incentives and to protect against spam as well.