Unveiling Saga’s Innovative Chainlet Pricing Model: A Stack Exploder Series

Introduction

In the latest episode of our podcast, Saga co-founder Jin and head of digital marketing Micah delved into the intricacies of Saga’s groundbreaking approach to chainlet pricing. Building on top of previous discussions around Saga’s two-tier token structure they discussed the fundamental principles guiding Saga’s economic model and shed light on the unique auction mechanism that determines the cost of running chainlets.

Fundamentals of Saga’s Chainlet Pricing Model

In the podcast episode, Jin and Micah emphasized Saga’s user-centric approach, highlighting the absence of gas or transaction fees for end users. Instead, the burden of infrastructure costs is shifted to the community, developers, and DAOs. The primary objective is to commoditize these costs, aligning payments closely with the actual expenses of running servers. This shift in payment structure aims to create a more stable and predictable environment for developers and users.

Calculating Chainlet Costs

The calculation of chainlet costs is a crucial aspect of Saga’s economic model. Jin and Micah explained the formula for determining the cost per chainlet, which involves multiplying the cost per validator to run a chain by the number of validators. Using a hypothetical example, they illustrated how this formula results in a total cost per chainlet, highlighting the significance of maintaining a smaller validator set to minimize costs.

Future Considerations

The discussion also touched upon the potential expansion of the validator set in the future. While the current focus is on the technical implementation, the team is open to increasing the set in due course. This expansion aligns with Saga’s long-term vision and will be pursued once the technical implementation is solidified.

Musical Chairs Auction

A key highlight of the podcast was the introduction of Saga’s innovative auction mechanism, referred to as the “musical chairs auction.” This auction method gathers bids from interested validators, selecting the cheapest 21 validators to participate in the validation process. The winners of the auction are required to validate chainlets for a day, while the losers face potential penalties, creating a competitive yet stable pricing environment.

Saga Auction vs. Other Systems

Jin and Micah compared Saga’s auction mechanism with other systems in the blockchain space. They emphasized the characteristics that set Saga apart, including permissionless deployment of chainlets, a shift from customer competition to validator competition, and a focus on fostering higher experimentation. The comparison with other systems, such as Polkadot’s parachain auction model, highlighted the unique approach adopted by Saga.

Conclusion

This episode provided valuable insights into Saga’s innovative chainlet pricing model, shedding light on the complex yet impactful mechanisms driving the platform’s economic structure. As the team continues to refine and implement these models, the future of Saga promises a user-friendly, stable, and scalable environment for developers and users alike.

For further information, follow us on Twitter, join our Discord and Telegram and subscribe to our Medium.