[Network Proposal] Increase the Transaction Fee

Hello All,

Myself and the ICON team took some time to do some brief analysis of our transaction fees relative to inflation. We also compared to BTC, ETH, and XTZ. As many of you know, transaction fees are burned to counteract inflation, with the eventual goal of having transaction fees outweigh inflation. We certainly believe this is possible, but after looking at our current transaction fee we believe it makes sense to start increasing it.

Quick Take:

  • Transaction fees in USD are currently extremely low, unnecessarily low
  • With our current average transaction fee, it would take ~43M transactions per day (~500 tps) to break even
  • With 10x the transaction fee, we could be counteracting inflation entirely with ~4.3M transactions per day (~50 tps)

We propose raising the base transaction fee to 10 times what it currently is over a period of time, making sure it is not causing disruptions in the network along the way. Step Price adjustments are a built-in Network Proposal, so all we need to do is make the proposal and agree. However, there is a maximum increase in Step Price of 30% so it will take some time to reach the goal of 10x growth.

Operating Procedure: Every Tuesday US time starting next week, ICX Station will propose to increase the transaction fee. Each team only has ~24 hours to vote because of the current voting structure. We will observe the effects of these changes and adjust the pace of the increase as necessary (perhaps speed it up if there’s no impact or stop if ICON services become too expensive). If the vote does not pass because nodes reject the decision, we can discuss on this thread about next steps. If the vote does not pass because not enough teams had time to participate in the vote, we’ll shoot to resubmit the proposal the next day.

Here is a model that shows the numbers:

10 Likes

I fully support this.

At the current time taking these kinds of measures would be beneficial for ICON’s overall economics. Plenty still needs to be done to bring in developers and more transactions overall, but this would close the gap between taking ICON from inflationary to deflationary, which is awesome.

Besides, the value can be modified down via a vote later too, if it makes sense.

6 Likes

100% supportive for this change. A 10x would still actually keep the fees at a competitive rate compared to other networks.

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I wonder how it would affect for the deployment of score. Currently deploying a SCORE can range from 10 ICX to 20 ICX. With a 10x increase, it would go to 100-200 ICX.

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That’s a fair question. We can take a look at SCORE deployment costs as we make the increases each week. I’ll also ask the ICON team about this

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We agree with this, it would be good to increase txFees for simple transactions, however having to pay more than 35-40 ICX to deploy a contract would not be sustainable in the long term. The current level for deployments is fair in my opinion.

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I think this is a great idea and would reduce inflation quickly. Great point on how it effects cost on deploying a smart contract too. Maybe the foundation could allocate icx to make deploying any smart contract free. Could that be done by another smart contract automatically? Just an idea. The other thing that would be good to add to the vote is adjusting max limits for staking for virtual step rewards. Currently I believe it is 100k icx staked and for a max of 1 month. It should be increased to maybe 500k and 24 months like originally planned. Could be included in the same vote? If not I may add another proposal for it.

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I’d be interested to hear opinion of ICONbet how this would affect them. Increasing TX fees could also motivate dapps to implement Fee 2.0 and perhaps even have the exactly opposite effect on inflation?

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Tomas, I have been contimplating fee 2.0 also for our casino. For initial release fees would be paid out of casino profits. But would like to consider fee 2.0 for covering some or all fees. But will be getting feedback from the community before implementing because of effects on inflation. But let’s look into the math. At 200k daily transactions at average transaction size, it would cost about 400 icx per day in fees. 10x takes to 4000. If we deployed fee 2.0 we would have to stake about 150k to the smart contract to cover fees.

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@ajaya and @Sharpn I spoke to the ICON team and you are indeed correct, thank you for bringing this up. As we increase step price, so will the cost of contract deployment. However, eventually we will have a way to adjust contract deployment costs as well so the 10x goal will be achievable, just not in the short term.

Having said that, I think we can still increase the transaction fee slowly. The maximum amount you can increase is 30%, and I still plan on making that proposal next week. But given that it costs 10-15 ICX to deploy a contract at current rates, I don’t think 10x is a reasonable short term goal anymore. We can start with a more reasonable short-term goal of 2-3x current rates, keeping an eye on SCORE deployment costs relative to USD value of ICX.

Let me know what you guys think

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I agree on score deployment cost. While the solution is probably general work on fee system I don’t think that’s a viable option in the short term since Icon foundation needs to dedicate a lot of resource for that. Why I suggest that because while right now score deployment and these kinds of stuff cost around 10-15 icx at 10x it’s 100-150 icx it’s 40-60 USD from today prices. while ether at around +800 USD prices deploying a smart contract was at under 5USD if I remember correctly. I might be a bit off with these numbers a long time passed since I deploy that contract. I will try to find it if I can. Anyway, my point is under these numbers increasing fee has not become viable. High contract deployment is a big issue from what I observe neo got hurt because of that. Foundation was funding the deployment costs some development teams were working on creating platforms and token solutions to drop the cost of deploying a smart contract

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I entirely agree with the higher transaction fee for ICX transfers or SCORE calls.
But I disagree about raising the cost of contract deployment.

Please correct me if I’m wrong, the contract deployment fees are insignificant compared to the ICX transfers fees in general. Raising the step price will impact the ICON dev community. It should be incentivized to develop on ICON, not the contrary.

We can change the step price (currently 1 ICX = 100,000,000 Step) and also we should change the βcontractCreate, βcontractUpdate and βcontractDestruct variables in order to keep the existing cost.

As far as I can see in the governance SCORE, the step price can be changed through a NetworkProposal, but step costs cannot, so it would require a governance SCORE update.

About SCORE deployment : contracts are getting bigger as developers are getting comfortable with more complex designs, so the deployment easily reaches 20-25 ICX.

6 Likes

Reminding everybody to stay on topic and maintain a professional atmosphere. This thread is for discussion on the current transaction fee and whether or not we should raise it.

Thank you @espanicon for encouraging others to stay on topic as well.

@Spl3en @Everstake @ajaya @Sharpn @Geo_Dude and all other developers, curious on hearing your thoughts. Are you ok with raising the transaction fee slowly now or should we wait until we have a network upgrade to lower the cost of SCORE deployment?

My opinion is that we can raise transaction fees by 30-50% prior to waiting for the update to change SCORE deployment costs, but I’m wondering how our developer focused teams feel. Let me know what you guys think. Ideally I’d like to have most of us in agreement before moving forward with an on-chain vote.

I will wait until the end of this week US time to propose a change in fees as people think this over

1 Like

Yeah increasing the cost to deploy a SCORE would hurt a lot of growing Dapps. ICONbet and the games built for it do a decent amount of updating to fix bugs, update existing mechanics, build new features requested by the community, etc and such and if it costs $50+ a pop to do an update that would start to become a detriment to getting developers onboard. $10 is not that big of a problem so I don’t see an issue with upping the fees by 2-3x for a short term goal.

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10-15$ for SCORE deployment would be ok for us. But it could be too painful for individual/smaller builders.

In case the fees would be too high for small builders, we could create a channel/category to help them finance their deployment? 10$ or 20$ is not much for funded/for profit DApps, but it may be too much of a hindrance for those who want to experiment or create small projects.

Most smart contract builders started by creating small projects and it would be a shame to lose future builders because of high fees. We think that getting the fees up is a good idea only if something like a centralized help for deployment is available :grinning: (could be a category on this forum, a telegram channel and with a message on icondev.io pointing to them, etc.)

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In general I believe it is a positive move to further decrease the inflation by increasing the number of tx fees going to treasury. On the long run I am unsure how the fees would benefit the ecosystem. We have seen Somesing migrating to Klaytn for an offer of a 1 year of free TX fees that are covered by their foundation. Was this the only reason for transfer I am unsure but is an aspect we need to think about when raising the price of transactions.

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If that was the only reason then that is a ridiculous reason. They could have just done staking with fee 2.0 and had free txs as well…

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We generally support this solution, but it can negatively affect individual developers and small companies(

Thanks for the feedback everybody. As a next step I’d like to propose a 25% increase in transaction fees. I’d like to make the Network Proposal at the beginning of the term that starts end-of-day Thursday US Time.

I agree that making SCORE deployment costs too high would be an issue, so I would say let’s raise it by 25% until we reach a maximum of 2x the current fees until we have the additional functionality to lower the SCORE deployment cost in tandem. We can re-evaluate after each step.

I also like Sharpn’s idea - @Sharpn would you mind putting more thought into this idea and follow up with me separately on how you think this can best be accomplished? Regardless of transaction fees, I think it would be good to have something like this for developers that are just getting started.

3 Likes