Dogecoin (DOGE) Developer Ross Nichol Proposes Fee Policy Reform to Reduce Fees by 50-Times, Elon Musk Approves
Developer Ross Nichol has publicized a fee policy reform plan on Dogecoin (DOGE), the controversial meme-themed cryptocurrency backed by Elon Musk. The staggering increase in the value of DOGE in the last 1-year has also increased the fees of the Dogecoin network. This has unnecessarily disincentivized on-chain transactions. For doing away this disincentivization problem, developers are looking at a change in the fee policy. With the solutiuon suggested by Ross Nichol, the fees will be driven down by around 50x. Analysts believe that this will help Dogecoin network to reinvent itself as a payment crypto.
Dogecoin’s original fee structure focuses on the reduction of on-chain spam. However, Ross Nichol’s fee policy reform plan suggests a plan that centers around a fee of 1 DOGE per kilobyte. This plan will also ensure that large amounts of spam are prevented. Once this reform fee structure plan is implemented, the transactions will become more affordable. To further discourage network spammers, a minimum 1 DOGE output size is recommended. An additional fee of 1 DOGE is levied upon users who are making smaller outputs. However, the basic problem here is that as a default in the software, it is not enforced on the network.
Investigations of the Dogecoin nodes showed:
“Approximately 8% of all transactions were taking advantage of the “free tier” inherited from Bitcoin Core. Meaning no fees were paid at all.
Another ~11% of all transactions were not implementing fees correctly due to missing wallet implementations. Many wallets simply implemented Bitcoin-like fee calculation.”
With the changes proposed by Ross Nichol, the decision making power from the relay network to the miners again.
The proposed changes also include:
- Incorporation of greater configurability of all parameters related to fee.
- Improvement of individual node operators’ sovereignty.
Different implementations are proposed by the developers to achieve this. The most complex but also the most effective one is the complete overhaul of the fee structure. It involves:
- Decreasing minimal relay fee
- Decreasing dust limit
- Decreasing the default fee rate
- Setting up of a default block inclusion fee
- Restoration of a functional free transaction space in blocks
Average fees of Dogecoin network is relatively low when compared with that of other tokens. While the fees of Bitcoin network and Ethereum network are US$7.12 and US$4.17 respectively, the current average fee of Dogecoin network is just US$0.49. O matter how low the network fees is, the Dogecoin developers want to drive down the fees further for encouraging more free flow transactions as well as the Dogecoin’s outflow from crypto exchanges.
Elon Musk, the CEO of Tesla and the unofficial “DogeFather”, has called the new proposed plans as “important to support”, signaling his approval for developer Ross Nichol’s suggestions.
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