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[BUG]: Bitcoin blockspace price discrimination put simple transactions at disadvantage

[BUG]: Bitcoin blockspace price discrimination put simple transactions at disadvantage

Original Postby Greg Tonoski

Posted on: December 27, 2023 16:44 UTC

Analyzing the pricing discrepancies in blockspace allocation, it becomes evident that there exists a notable imbalance.

A comparison between simple and complex transactions reveals a disproportionate cost per byte, with simple transactions incurring a higher "weight" than their complex counterparts. For instance, the weight-to-byte ratio for a simple transaction (txid: aabbcce67f2aa71932f789cac5468d39e3d2224d8bebb7ca2c3bf8c41d567cdd) is calculated as 3, given its 616 weight over 205 bytes. Conversely, a complex transaction (txid: 1c35521798dde4d1621e9aa5a3bacac03100fca40b6fb99be546ec50c1bcbd4a) displays a lower ratio of 1.49, with 1140 weight spread across 767 bytes.

The current pricing model creates several adverse impacts on the network. It fosters an incentive structure that is askew, leading to potential misallocation of block space and devaluation of blockspace worth. Additionally, it discourages users from conducting simple transactions and may inadvertently encourage centralization by favoring entities that predominantly engage in complex transactions.

To rectify these concerns, a uniform pricing strategy is proposed, advocating for an egalitarian approach where each byte, regardless of its position within or outside of the witness data, is valued equally. This would imply that both our examples would be evaluated at a 1:1 weight-to-byte ratio, ensuring fairness and efficiency in blockspace utilization.

A possible implementation of this pricing correction could be integrated into a subsequent update of Segwit transactions. Such an adjustment would address the current inefficiencies and vulnerabilities inherent in the existing system. The community's perception of this proposal could dictate the feasibility and timing of such changes, prompting discussion and consideration for future development efforts.