HOdlcoin Improvement Proposal 001

HIP: 001–version 2
Layer: Consensus (hard fork)
Title: On Chain Scaling Solution
Author: Free Trade
Status: Proposal
Created: 2017–06–02. Edited 2017–07–04
License: BSD-2-Clause

Abstract

Increase maximum blocksize to 32MB, introduce a minimum transaction fee of 1 cent, destroy 50% of transaction fees.

Motivation

To enable network growth without allowing network spam.

Rationale

Bitcoin is currently suffering congestion and high transaction fees because of the failure of its miners to agree and implement a scaling solution. This HIP suggests a pre-emptive solution for HOdlcoin to avoid similar scaling problems.

The replacement of a 1MB hard limit on block size with a 32MB limit will increase capacity by 32 times.

To prevent spam, a minimum transaction fee of $0.01 will be applied to an average sized transaction. It will therefore be costly for attacker who wishes to create large blocks that need to be stored by network nodes.

As miners can avoid transaction fees by creating blocks and thereby keeping all transactions fees, 50% of transaction fees will be required to be destroyed so that an attacker cannot spam simply by becoming a miner.

Side Effect

Destroying 50% of transaction fees has the added beneficial effect of introducing a deflationary pressure. This will counter the inflationary pressure of the interest payments and block subsidies.

Specification

i) Replace the static 1M block size hard limit with a 32MB limit.
 This will be achieved with a change to the MAX_BLOCK_SIZE constant

ii) Require a minimum transaction fee of approximately 1 cent(USD) for a basic transaction.
 The amount of HOdl required to cover a cost of $0.01 will be approximated by using the current network difficulty. Only transactions including a fee of at least this approximation will be valid. A maximum minimum of 0.05 HDL will apply to avoid prohibitively large transaction fees while the coin has a low market value.

iii) Destroy 50% of transaction fees.
 Only blocks that destroy 50% of transaction fees will be valid

Network Economics

HOdlcoin already has greater capacity than Bitcoin due to more frequent blocks. Following the implementation of this HIP, HOdlcoin will have a capacity of 116 times that of Bitcoin. HOdlcoin will support approximately 800 transactions per second (tps). This compares favourably to Paypal(200 tps) but is lower than Visa(1700 tps).

Operating at full capacity, with minimum fees on all transactions will create $250 million in transaction fees each year. Half of this is destroyed. This deflation of the money supply is sufficient to offset an inflation rate of 7.5% on a $1.7 billion dollar capital value.

Deployment

This HIP is presumed deployed and activated as of a block height 1 month after the HIP is accepted by Nutocracy motion and code deployed.

Backward Compatibility

The first block larger than 1M, or containing transactions that do not have the minimum fee, or not destroying 50% of transaction fees will create a network partition, as nodes implementing this HIP will reject that block.