Transaction fees - how do they work?

RichardAO

RichardAO

Member
I understand that the network needs to be compensated for the work of transactions it supports, but as the mining rewards diminish over time and the number of coins in circulation slows, will the transaction fee also change? Is this fee always a solid number of Dash, or a formula whose factors I havent heard yet?
Thanks for the help folks!
 
I'm not (yet) an expert on Dash, but I suppose it's the same as Bitcoin.
Users choose the fee for their transactions, while miners choose which transactions to include in their blocks.
As demand for transactions grows, more transactions will compete for miners' resources and miners' acceptable fees level is expected to raise.
The way this works in practice is wallet software typically has a preset fee value (e.g. in dash/kb), deemed to be a reasonable choice by the authors of said software, and may also provide the user with the option to set a custom fee level of their liking.
 
Just use zero for the transaction fee for Dash. There are never enough transactions to fill a block like with Bitcoin. If you want to IX, then you pay the .01 Dash fee of 15 cents. And if you PrivateSend it will round up so it is best to send .099 or just under a multiples of .1.
 
So am i to understand that transaction fees are voluntary/optional? Who sets the fee, buyer or seller? Is the fee negotiable?

Also, to my earlier point, might this method or fee structure change in the future as coin emmisions reduce?

Furthermore if a great deal of Dash is stored in masternodes, can transaction fees be used to incentivise decentralization of stored Dash?
 
The highest fee transactions get into each block. A 1 cent fee transaction with Bitcoin will take a day to confirm. A 25 cent fee will get in the next block.

The sender sets the fee. Miners can set a minimum fee and could reject transactions with too low of a fee. Litecoin has a really low minimum fee to fix a load of spam transactions they had in the past. Otherwise, most coins allow zero fee transactions. A zero fee Bitcoin transaction may take a month to either confirm or be rejected.
 
The miners can prioritize which transactions they process and reject transactions if they consider the fee too low?

This sounds counter productive if we are offering a product called "instantsend"... If senders elect to send low fees, and miners raise their bar above those fees, wouldnt this cause a bottle neck of the network?

Thanks everyone for taking the time to share your knowledge with me, i apologize if i seem a PITA.
 
RichardAO said:
The miners can prioritize which transactions they process and reject transactions if they consider the fee too low?

This sounds counter productive if we are offering a product called "instantsend"... If senders elect to send low fees, and miners raise their bar above those fees, wouldnt this cause a bottle neck of the network?

Thanks everyone for taking the time to share your knowledge with me, i apologize if i seem a PITA.
Click to expand...

You win the Bingo! InstantX has a 0.01 free(15 cents), which is higher than the standard fee. InstantX can lock transactions, but if the blocks are full and fees are higher than that 0.01 then IX transactions can get rejected. The only way to ensure a lock is to have a variable block size. Vcash already figured this out with Zerotime(similar to InstantX) and variable blocks. But don't worry too much, Dash hasn't increased transactions per block for the last 2 years(unlike Bitcoin that has had continuous increases every month).
 
Note that all this is supposed to change with Evolution. The plan for Evolution is currently to target merchants to pay the fees. So a regular user who uses Dash under X times per month, will not have to pay any fees. But after X transactions, it's assumed they're using Dash as a business, and fees start being charged. How exactly this will work, I don't know. I don't remember seeing any actual plan, but they want to make Dash like any other payment industry and put the burden on the merchant, not the customer.

I believe they want to keep the fees at or below 1%, which is much higher than what it costs to send coins today, however it's also much lower than any current industry standard. If it works, this could make mining profitable forever. A lot of people wonder how miners will collect enough fees to make it worth while to continue to mine when the rewards virtually disappear? Especially if there is no room in the block (or no pressure for room in the block, as it is in Dash, to drive the fees up)? So either everyone will have to pay high fees in coins like Bitcoin, or miners will stop mining due to fees being too low as in Dash (and remember, we need that "pressure" of mining competition to keep the blockchain secure!)

So once again, Dash might have the best solution. We shall see if it can be implemented :) I see many difficulties in enforcing this, so???
 
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TanteStefana said:
Note that all this is supposed to change with Evolution. The plan for Evolution is currently to target merchants to pay the fees. So a regular user who uses Dash under X times per month, will not have to pay any fees. But after X transactions, it's assumed they're using Dash as a business, and fees start being charged. How exactly this will work, I don't know. I don't remember seeing any actual plan, but they want to make Dash like any other payment industry and put the burden on the merchant, not the customer.

I believe they want to keep the fees at or below 1%, which is much higher than what it costs to send coins today, however it's also much lower than any current industry standard. If it works, this could make mining profitable forever. A lot of people wonder how miners will collect enough fees to make it worth while to continue to mine when the rewards virtually disappear? Especially if there is no room in the block (or no pressure for room in the block, as it is in Dash, to drive the fees up)? So either everyone will have to pay high fees in coins like Bitcoin, or miners will stop mining due to fees being too low as in Dash (and remember, we need that "pressure" of mining competition to keep the blockchain secure!)

So once again, Dash might have the best solution. We shall see if it can be implemented :) I see many difficulties in enforcing this, so???
Click to expand...

Will that 1% cap be voted upon before the release of Evolution, or has that already been decided?

Will a 1% transaction fee remain attractive if the relative cost of Dash per dollar rises?

Is there a way to peg the amount of the fee to some other moving market data to more fairly determine it?
 
RichardAO said:
Will that 1% cap be voted upon before the release of Evolution, or has that already been decided?

Will a 1% transaction fee remain attractive if the relative cost of Dash per dollar rises?

Is there a way to peg the amount of the fee to some other moving market data to more fairly determine it?
Click to expand...

Chances are those kind of values wont just be voted on but that they'll be dynamic variables continuously adjusted by the network. That's the direction discussions have gone in anyway, there's a post from Evan mentioning it around here somewhere. I don't know how it will function though, at a guess it will first arrive as a mechanism to tweak relatively unimportant variables via voting to get some idea on how it performs on the live network and a more solid implementation developed based on how that works out.
 
RichardAO said:
Will that 1% cap be voted upon before the release of Evolution, or has that already been decided?

Will a 1% transaction fee remain attractive if the relative cost of Dash per dollar rises?

Is there a way to peg the amount of the fee to some other moving market data to more fairly determine it?
Click to expand...

We should have a "good question" emoji :) Yah, nobody knows yet how this will work in the end :) I see issues to overcome to make it work as well.
 
RichardAO said:
Will that 1% cap be voted upon before the release of Evolution, or has that already been decided?

Will a 1% transaction fee remain attractive if the relative cost of Dash per dollar rises?

Is there a way to peg the amount of the fee to some other moving market data to more fairly determine it?
Click to expand...

You got to be fucking kidding.. MNs don't vote on anything strategic, they simply approve grants one by one. For 12.1, IX fees are reduced to 0.001 dash.. that was never voted on either. All these pricing policies are made by The New Geek Bankers, it has nothing to do with MNs.

And watch how my post gets marked as trolling even though I have simply stated facts.
 
stan.distortion said:
Chances are those kind of values wont just be voted on but that they'll be dynamic variables continuously adjusted by the network. .
Click to expand...

These are your chances my beloved #13.
The "New" Geek Bankers want to preserve the power to adjust everything.
But People are not stupid to accept the "New" Geek Bankers.
All the rest ordinary people (will) demand those values to be voted.

Like it or not, I am the living future, and the "New" Geek Bankers are already the dead past.
 
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GrandMasterDash said:
You got to be fucking kidding.. MNs don't vote on anything strategic, they simply approve grants one by one. For 12.1, IX fees are reduced to 0.001 dash.. that was never voted on either. All these pricing policies are made by The New Geek Bankers, it has nothing to do with MNs.

And watch how my post gets marked as trolling even though I have simply stated facts.
Click to expand...

Actually, the reason for the price reduction for IX in 12.1 was my begging and harassing the core guys. Of course, Evan said core was to busy to code the change so I got the help of an outside core member(chaeplin who was awesome) at the time to do the code and submit and github request. Yeah, pretty messed up. The one thing Dash can do to make it more useful is reducing the fee from that 15 cents to 1.5 cents and they "don't have time for it". A $110,000 monthly budget but no time for a simple fee change.

That change made it to github in Sept 2016 and they are still having stability issues with 12.1 on testnet, so maybe that Feb 5th 12.1 release date will get moved yet again. Here is the pull request. https://github.com/dashpay/dash/pull/1039
 
TanteStefana said:
Note that all this is supposed to change with Evolution. The plan for Evolution is currently to target merchants to pay the fees. So a regular user who uses Dash under X times per month, will not have to pay any fees. But after X transactions, it's assumed they're using Dash as a business, and fees start being charged. How exactly this will work, I don't know. I don't remember seeing any actual plan, but they want to make Dash like any other payment industry and put the burden on the merchant, not the customer.

I believe they want to keep the fees at or below 1%, which is much higher than what it costs to send coins today, however it's also much lower than any current industry standard. If it works, this could make mining profitable forever. A lot of people wonder how miners will collect enough fees to make it worth while to continue to mine when the rewards virtually disappear? Especially if there is no room in the block (or no pressure for room in the block, as it is in Dash, to drive the fees up)? So either everyone will have to pay high fees in coins like Bitcoin, or miners will stop mining due to fees being too low as in Dash (and remember, we need that "pressure" of mining competition to keep the blockchain secure!)

So once again, Dash might have the best solution. We shall see if it can be implemented :) I see many difficulties in enforcing this, so???
Click to expand...

Is this still the plan with Evo?

I think a total number of transactions might not be a good determining factor, because it would hurt microtransactions perhaps. Maybe it should instead assess it by total value of transactions, or maybe a certain threshold of whichever is greater (if X transactions are reached, OR when Y value in transactions over Z period is reached, whichever is greater)? I just don't see any advantage to locking out microtransactions.
 
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