Bitcoin is not free. It would create chaos similar to what Solana faces today.
No fees would clog Bitcoin’s mempool — a reservoir of pending transactions — with useless mini-transfers to the point that legitimate users would face extended delays and even be ignored altogether.
Bitcoin processes transactions according to the principle of first in first out. A rogue spammer can code a script which sends millions of transactions in one go between two wallets.
In this scenario, your lunch money could be delayed by a few days if only 2,500 Bitcoin transactions can fit into a block.
Bitcoin’s fee-auction model is designed to discourage this type of attack. Users compete against one another to be included in the block. It costs over 1,000 sats for one low-priority sat, which makes most spams uneconomical.
Solana does work on a “first in, first out” basis. There’s no mempool, so users — usually through apps and wallets — send their transactions directly to the network’s block builders (referred to as “leaders”() to be included.
Priority fees were not available to users until the 2021 bull run, when bots brought the network to a halt for several hours. Developers then sought to address the issue by offering real users the option to remove spammers. Priority fees aren’t available in all Solana Apps, which reduces the effectiveness of these apps. Plus, because it is so cheap, bots still haven’t been discouraged.
Last week, statistics were cited that showed 77% of all non-vote transaction took place. “dropped” It is not the same as “failed” Some wallets and applications do not differentiate between them.
These transactions have been dropped because they took too long to be processed. These transactions will sit in the Bitcoin mempool for a while until they are eventually added to blocks during times of low demand. Solana does not have a mempool and simply let’s those transactions go without processing them after a certain period.
Insiders confirm that arbitrage bots cause the majority of these dropped transactions. These bots flood block leaders with massive transactions to capitalize on the price differentials in memecoins across DEXs. The low liquidity on platforms, combined with the record hype following BONK and WIF’s success has led to this.
You might have to pay a few hundred bucks in fees for transactions which never materialize. It could be all repaid and more with a highly profitable arbitrage transaction.
Unless Solana fees are higher than the economic risk of missing out on those trades, then regular folk are destined to suffer dropped transactions — an existential problem. Solana’s developers know this and have encouraged more app makers to implement priority fees. They hope that the bot activity will be reduced.
The new Solana 1.18 version has been developed for several months. Now, it is anticipated to reach mainnet April 15, 2019. It is expected to reduce congestion in some cases by changing the handling of transactions that have priority fees. This will not be fully known until mainnet when the system is tested under actual conditions.
Yet, it doesn’t seem that a new fee structure is a high priority. The next most important step will be to reduce the network’s reliance upon QUIC. The transport layer was developed years before Solana’s launch by Google, and Jump Crypto is expected to provide the client.
It is hoped that improving Solana’s network layer and how applications communicate with underlying infrastructure will better inform future changes to the fee model.
The bots will be in charge until that time. Or, at least until memecoin mania dies and the arbitrage opportunities dry up — whichever comes first.
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