• bitcoin

    Bitcoin (BTC)

    $ 4,177.45 5.41%
  • ethereum

    Ethereum (ETH)

    $ 164.72 11.87%
  • ripple

    XRP (XRP)

    $ 0.338935 5.80%
  • stellar

    Stellar (XLM)

    $ 0.096673 7.18%
  • eos

    EOS (EOS)

    $ 4.31 12.51%


Saving fee markets with second-price auctions

Quick Take

  • With the majority of existing coins employing a disinflationary monetary policy, it is vital that vibrant, sustainable fee markets emerge
  • The second-price auction structure, coupled with mechanisms to disincentivize manipulation, may be the most sensible solution, engendering both positive long-term user experiences and stable miner revenue

Cryptocurrency transactions require fees. Without them, blockchains would be subject to flooding-based denial-of-service attacks, rendering networks functionally unusable. 

Transaction fees also serve a second purpose — subsidizing miner income. While fees are currently just a small percentage of income for most networks, this revenue stream will become increasingly relevant over time as protocols with disinflationary monetary policies phase out block rewards.