Title: A Proposal for Adopting a lower Transaction Fee Cost on BNB Smart Chain to Enhance Competitiveness.
As a blockchain user, I have observed the need for a more adaptive transaction cost distribution on the BNB Smart Chain (BSC). This proposal aims to justify the importance of having a more flexible transaction fee structure, ensure efficient block utilization, and attract new users. Ultimately, this approach would help sustain the BNB economy and improve BSC’s position in the market, especially in the multichain strategy that we can observe in the roadmap ( https://www.bnbchain.org/en/blog/bnb-chain-tech-roadmap-2023/ )
Currently, Layer 2 (L2) solutions are becoming increasingly mainstream, offering users cheaper transaction fees compared to BSC’s Layer 1 (L1) fees. With L2 solutions gaining popularity, there is growing competitive pressure on the BSC network to maintain its market share. BSC transaction costs are currently set at a relatively high fixed rate of 5 gwei, which may not be as appealing to users as the more affordable fees provided by L2 solutions outside of the BSC ecosystem. This will ensure the existing and future BNB Chain L2 solutions remain competitive and keep attractive users in the ecosystem.
Over the last 6 months, the key measurements of the network have plateaued, creating a situation where the network is underutilized, with utilization varying between 15-20%. To prevent a slower pace of growth in comparison to rapidly growing L2 solutions, BSC validators should feel the urgency to reassess their current transaction fee structure.
I firmly believe adjusting the fees to be more cost-effective could help BSC maintain its market position and attract users looking for more affordable and efficient blockchain solutions.
I’ve created some simulations to demonstrate the potential uptick and the benefits of the adjustment.
BSC operational parameters:
- Number of Blocks per day: 28,800
- Gas Limit: 140M
As you can see below, network utilization can impact quite heavily the overall reward as we adjust the gas price:
With 20% block capacity at 5 gWei:
- 28,800 * (140M*20%) * 5gWei = 4,032 BNB / Day
With 33% block capacity at 3 gWei:
- 28,800 * (140M*33%) * 3gWei = 4,032 BNB / Day
With 50% block capacity at 2 gWei:
- 28,800 * (140M*50%) * 2gWei = 4,032 BNB / Day
With 80% block capacity at 2 gWei:
- 28,800 * (140M*80%) * 2gWei = 6,451 BNB / Day
I propose that BSC validators adopt a more flexible approach towards transaction fees, enabling users to choose fees below the current 5 gwei rate, with options to go as low as 3 or 4 gwei, depending on their financial needs.
Automatically, this change would make BSC L1 more attractive than other ecosystems’ L2 solutions and provide a competitive advantage for potential BSC L2 solutions ( BSC L2 should have a target of < 0.005$/tx ). Furthermore, the upcoming Greenfield Decentralised Data Storage System will attract new users that is going to bring new traffic towards BSC.
Moreover, high transaction volume on BSC would still offer substantial value for BSC validators, maintaining a strong financial incentive to participate as validators. This approach would yield the following benefits:
Enhanced sustainability: Allowing projects to be more sustainable and providing a strong economic incentive for new projects to migrate to BSC. Lower transaction fees would help sustain the blockchain economy during low-volume periods.
Attracting new users: Offering lower fees on L1 with high throughput utilization could attract new users to the BSC ecosystem, promoting growth and improving BSC’s market position.
Optimized block utilization: By attracting new users, validators can better utilize each block’s capacity and increase their overall rewards.
As a validator to maintain a targeted return on investment, validators could consider raising the commission rate they receive from the validator’s earnings.
By implementing this proposal, both BSC L1 and L2 would benefit from increased competitiveness and market adaptability, creating a win-win solution for the entire ecosystem.
In conclusion, this proposal highlights the importance of adopting a more flexible and adaptive transaction fee structure on BNB Smart Chain (BSC) to better compete with Layer 2 solutions and attract new users. By allowing users to choose transaction fees less than the current 5 gwei rate, BSC can maintain a strong financial incentive for validators and promote a sustainable ecosystem. This approach would result in enhanced sustainability, attracting new users, and optimized block utilization, ultimately benefiting both BSC L1 and BSC L2. Implementing these changes would ensure the continued growth and competitiveness of the BSC ecosystem in an increasingly competitive market.