NEAR Transaction Fees: Priority Auctions and Contract Rewards

Summary

The article explains transaction fees as compensation for block producers and a way to rank transactions by users’ willingness to pay. It compares NEAR’s EIP-1559-style base fee with Ethereum’s model, focusing on two differences: NEAR disallows in-protocol tips and directs part of the base fee to smart contracts used in the prior epoch.

The author argues that removing tips leaves priority unresolved when block space is scarce or transactions conflict, such as competing for an arbitrage trade. This may shift bidding into private arrangements with block producers. Contract rewards, the article argues, may encourage developers to refund users, retain gas-intensive code, or resist changes that reduce fee revenue. The author corrects an initial claim about the utilization target: refunds could raise the formal base fee while the mechanism still targets 50% utilization. These are mechanism-design arguments, not empirical measurements, and the piece reflects the network design and assumptions at the time it was written.

Key ideas

• Transaction fees compensate block producers and can rank users’ competing requests by priority.
• NEAR’s lack of protocol tips may leave transaction priority to informal deals, including during conflicts even when blocks are not full.
• The author argues that private priority markets could create unequal access and add coordination costs.
• Contract fee rewards may prompt refunds to users and weaken incentives to reduce gas consumption.
• The article corrects its claim about refunds and utilization, noting that the target can remain 50% with a higher formal base fee.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.