Fee System

What network fees will Bearmint bring?

Welcome to the new Bearmint Investigation Series. As we near the public release, this extensive series will dive into the brand new ARK framework and consensus called Bearmint while breaking it down as simply as we can.

In our last episode, we went over slashing in the upcoming Bearmint consensus and framework. In this short episode we’ll cover network fees.

Network Fees

The majority of blockchains have a transaction fee system also known as gas. One purpose of this is to create an economic incentive for validators to continue their work and maintain the best possible levels of performance and security for the network. Another reason is to mitigate spamming the network with fake transactions. While this does not stop spam transactions completely, it can help deter this behavior due to the exponential increase in network fees that can accrue with the total amount of transactions being sent.

These network fees can incentivise validators or miners to continue securing the network, but in some blockchains the fees are burned. Burning is the action of sending a transaction to a dead address with no access, essentially burning every coin or token sent to it. This is how stable coins work as well, by automatically minting new tokens or burning them frequently to maintain their dollar-pegged value in circulation.

Burning transaction fees in some networks also works as a deflationary measure by reducing the amount of coins or tokens in circulation.

Static Fee Vs. Dynamic Fee

When ARK was first created, it had static fees. This meant that every single transaction had a set price cooked in. No matter how busy the network was, the fees remained the same. This approach can be useful for some applications, but when a network grows and is being more widely used, a static fee can be more expensive.

This fee system was eventually swapped for a dynamic fee model allowing for much lower fees that were size based. Size based dynamic fees are simple to understand. Each transaction on the network is a certain size, much like any file takes up space, so does every network transaction. This fee model allowed the validators to set their minimum accepted fee threshold and increase or decrease it based on network volume.

What fee system will Bearmint Support?

Everyone already familiar with ARK will be happy to know that the fees will remain dynamic with Bearmint, with small changes at the consensus and validator levels. All network fees in ARK will be enforced at the consensus level. Validators will no longer be able to adjust the fees. This also means that if a validator attempts to change the fee structure, it will not be able to reach consensus and could face jailing. Each validator must have the same milestones and gas/fee configurations. They must unanimously agree on these values and run the exact same milestone configurations to ensure that reaching consensus is unaffected.

This consensus enforced dynamic fee system brings more consistency and will be easier to predict fees when the network is busy. This system will maintain itself and keep fees as low as possible while automatically adjusting for network activity.

Conclusion

ARK will continue to have extremely low fees with Bearmint. The biggest change in the fee system is moving it from the validators decision, directly to the consensus level, eliminating the possibility of human error or bad actors. Bearmint will also support the possibility for static fees and even zero fees for any project building on top of ARK. Leaving it up to the builders to choose.

As for the exact equation to determine the network fees in Bearmint or whether there will be a fee burning mechanism, or even whether higher fees can increase transaction speeds, we will have to wait for the public testing for this information to become available, but we are certain it will be very similar to the current structure. We will update this blog post with more information as it becomes available.

This is episode 5 of our extensive blog overview, with many more to come. Stay tuned for more from this series as we get closer to the Bearmint public testing release. Be sure to subscribe to our blog and follow us on social media to stay up to date, and don’t forget to jump into the conversation on the ARK Community Discord as well.

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