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From: William Morriss <wjmelements@gmail.com>
To: Chenxi Cai <Chenxi_Cai@live.com>
Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP Idea: Marginal Pricing
Date: Wed, 29 Nov 2017 22:05:02 -0800	[thread overview]
Message-ID: <CADpM8jrOfjCaHAu97MGaaAouYootyBCwuBw1fvay0zK8pnwRVg@mail.gmail.com> (raw)
In-Reply-To: <CY4PR1201MB019720B8D7C7AE10182F893186380@CY4PR1201MB0197.namprd12.prod.outlook.com>

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On Wed, Nov 29, 2017 at 9:52 PM, Chenxi Cai <Chenxi_Cai@live.com> wrote:

> Hi All,
>
>
> Auction theory is a well-studied problem in the economics literature.
> Currently what bitcoin has is Generalized first-price auction, where
> winning bidders pay their full bids. Alternatively, two approaches are
> potentially viable, which are Generalized second-price auction and Vickrey–Clarke–Groves
> auction. Generalized second-price auction, where winning bidders pay their
> next highest bids, reduces (but not eliminate) the need for bidders to
> strategize by allowing them to bid closer to their reservation
> price. Vickrey–Clarke–Groves auction, a more sophisticated system that
> considers all bids in relation to one another, elicit truthful bids from
> bidders, but may not maximize miners' fees as the other two systems will.
>
>
> Due to one result called Revenue Equivalence, the choice of fee design
> will not impact miners' fees unless the outcomes of the auction changes
> (i.e, the highest bidders do not always win). In addition, the sole benefit
> of second-price auction over first-price auction is to spare people's
> mental troubles from strategizing, rather than actually saving mining fees,
> because in equilibrium the fees bidders pay remain the same. Therefore, in
> balance, I do not see substantial material benefits arising from switching
> to a different fee schedule.
>
>
> Best,
>
> Chenxi Cai
>
>
Changing the bidding system to the marginal price allows us to supersede
the block size limit, which changes the outcome of the auction, as
different transactions are included.

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  reply	other threads:[~2017-11-30  6:05 UTC|newest]

Thread overview: 12+ messages / expand[flat|nested]  mbox.gz  Atom feed  top
2017-11-30  0:47 [bitcoin-dev] BIP Idea: Marginal Pricing William Morriss
2017-11-30  2:38 ` Ben Kloester
2017-11-30  6:13   ` William Morriss
2017-11-30 11:40     ` Gregory Maxwell
2017-11-30 12:03     ` Eric Voskuil
2017-11-30  9:37   ` Federico Tenga
2017-11-30  5:52 ` Chenxi Cai
2017-11-30  6:05   ` William Morriss [this message]
     [not found]     ` <CY4PR1201MB0197936CBE467B38DCC26DC986380@CY4PR1201MB0197.namprd12.prod.outlook.com>
2017-11-30 16:15       ` Chenxi Cai
     [not found] ` <CAAS2fgS5jiNCmdwEt3YtZMJ0SfhC8Hw1eXr_0Vo5AQhYv7bJfg@mail.gmail.com>
2017-11-30  9:12   ` Gregory Maxwell
2017-12-01  7:58 ` Ryan J Martin
2017-12-02  3:55 ` Damian Williamson

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