News

Dogecoin’s fee change to reduce costs and incentivize miners and nodes

Dogecoin, a cryptocurrency that has been in the news a lot this year, is undergoing a change which is designed to reduce overall transaction fees as well as incentivize node operators to relay low-fee transactions. The proposal was announced on Sunday and is led by Dogecoin’s core developer Patrick Lodder and his team. The proposal is expected to be implemented gradually over multiple software releases.

The current ‘fee model’ of Dogecoin was introduced in 2014 and implemented in 2018 which was intended to prevent on-chain transaction spamming. These fees charge 1 DOGE per kilobyte of transaction data. Extrapolating it with the average transaction data gives about 2.16 DOGE per average transaction.

Although the number was pretty nominal, with the sudden spike in price for DOGE this year, these fees have grown up considerably. This is why users are keeping their DOGE on centralized platforms since keeping them on self-hosted wallets is expensive. Moreover, transactions with relay fees less than 1 DOGE don’t provide enough worth to be transferred and hence remain unconfirmed.

To provide a viable solution to this, the changes proposed cater to the audience for a freer system where miners & nodes drive rates.

  • The minimal relay fees will be lowered from 1 DOGE to 0.001 DOGE. At launch, node operators will also be able to set custom relay fees.
  • The dust limit would be set to 0.01 DOGE incentivizing the use of microtransactions. (Dust is the fraction of the token generally considered negligible.) Due to the current spike in DOGE, the dust limit is very high for viability which is why decreasing will make miners relay and accept those transactions completely. Node operators will also be able to control this dust limit through the new “-dustLimit” parameter.
  • Relay logic will be enhanced allowing more transactions into the ‘freespace’ which is an apportioned section of a block with transactions with negligible relay fees. Due to high relay fees, the freespace went mostly unused. However, this change will change the priority from the mempool and it’ll not be dependent on transaction size.
  • The software release following this one will change the recommended minimum fee rate to 0.01 DOGE once 30% of the network starts relaying transactions with 0.01 DOGE/kb.

Dogecoin developer Ross Nicoll said that the purpose of DOGE’s transaction fees is spam prevention:

“We provide suggested values so users can have confidence. If they use those values, their transactions will confirm in a reasonable time.”

Related Stories:

Leave a Comment

Your email address will not be published. Required fields are marked *

Close Bitnami banner
Bitnami