- A Zcash developer has presented a detailed framework for a dynamic fee system that is intended to bring more security.
- It stipulates that transaction costs are adjusted based on current comparative data and simulated congestion.
Shielded Labs, an independent Swiss organization that supports Zcash (ZEC), presented the “Zcash Dynamic Fees Lab” proposal. Looking at historical context, he notes that fees originally started at 10,000 zatoshi before dropping to 1,000. However, these low base fees made the network vulnerable to “sandblasting attacks,” where large numbers of transactions could bring down the chain. Shielded Labs states:
“In response, Zcash Dynamic Fees Lab introduces Action Abstraction, which combines transparent inputs and outputs, Sprout JoinSplits, Sapling Outputs and Orchard promotions into a single accounting unit.”
The aim is to create a market where customers pay fees based on recent transaction activity, with adjustments made based on network congestion. This approach relies on analyzing the fees that customers have recently been willing to pay and using it as comparative data.
This comparison-based pricing is common, for example in NFT collectibles and real estate.
This is how it works
The system calculates a baseline based on the last hour’s activity, typically around 50 blocks, and adds a buffer of 5 blocks to prevent tampering. To model an always-active network, synthetic transactions of average size are included. The initial minimum price can be very low as it is adjusted upwards over time.
The standard fee is then defined as the average fee per action from the observation period. To support the network sustainability mechanism, the minimum price should be divisible by five, so that around 60% of the transaction fees can flow back into the issue.
To simplify the system and reduce fee fluctuations, the average fee per action is rounded to the nearest power of ten, which also limits information loss and reduces the potential for transactions to be linked. Over time, the median fee will increase and customers will be able to prioritize their transactions by temporarily enabling a “fast track” with a 10x fee multiplier, while miners will be expected to process higher fee transactions first in their own economic interest.
The rollout will initially begin with a monitoring phase, followed by a strategy phase and a consensus phase to enforce on-chain fees, as well as threat modeling to protect against spam and potential privacy leaks.
Interest in Zcash has also grown among institutions. How CNF reportedGrayscale has filed with the SEC to convert its Zcash trust into an ETF and plans to list it on the NYSE Arca under the ticker “ZCSH” to provide investors with regulated exposure to Zcash.
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