For many, the beauty of blockchain is its immutable nature: blockchain networks are created and upheld through distributed networks; therefore, in order to change something about a blockchain, at least 50 percent of the computers that uphold the network would have to consent (or be compromised, in some cases.)
However, the face that governance happens in a decentralized manner on blockchain networks can also mean that changes are, at times, happen slowly; because there isn’t just one small group of individuals making decisions about the future of a network from the top down, it can take time to gather support, for example, to changes in a network’s protocol.
In some cases, this is why major technical issues have remained alive and well on blockchain networks for years, ultimately having major influences on a network’s destiny: for example, on the Bitcoin network, a lack of consensus over how transaction speeds should be improved has caused BTC to fill a role as a sort of ‘digital gold’ rather than a digital cash.
On the Ethereum network, these issues have manifested in other ways: while transaction speed may not be much of a concern on Ethereum as it is on Bitcoin, there has been quite a bit of chatter about another aspect of Ethereum’s protocol: the ability to manually set transaction fees.
What kinds of problems does this cause? And can Ethereum’s governance system efficiently implement a mechanism that will stop the problem from taking place in the future?
In June, an Ethereum users $5.2 million in fees on two ETH transactions–the reasons are unclear
Transaction fees on the Ethereum network are referred to as “gas”, which is Priced in sub-units of the cryptocurrency ether, known as ‘gwei’. Users can manually set the price of gas on each transaction.
The ability to manually set transaction fees was included in the Ethereum protocol as a way for users to be able to have a higher degree of control over the speed of their transactions. However, this can go awry.
In June, when an Ethereum user paid a $2,600,000 fee to send just $130 worth of ETH; the fee was worth roughly 2,000,000% more than the transaction itself.
The next day, the same user paid the same amount of fees on a transaction worth $86,400.
(To be clear, many Bitcoin wallets also allow transaction senders to manually set their fees; as such, there have been incidents on the Bitcoin network in which, for example, a transaction sender paid a $137,081.31 fee on a transaction that amounted to $5.)
However, regarding the most recent Ethereum incident–it was later theorized that the massive fees may have either been accidental or the result of a malfunction in the users’ digital wallet; others theorized that the massive fees could have been an attempt at money laundering or some other kind of foul play.
The mining pools that receive the fees are working toward solutions
The transaction fees…