3 ms·

If the overhead was negligible, then so would gas costs.

b112 3y ago
Gas costs have no relation to processing power. It wouldn't fluctuate wildly, otherwise. Eth is now POS, a laptop in a corner can now "mine" eth.
pa7x1 3y ago
Absolutely not. The gas fee is not moved up or down based on the cost to settle a transaction. It's an independent market based on supply and demand for blockspace. Supply is constrained because for the network to remain decentralized you need to be able to run a node inexpensively, demand is just a result of value added.
- Chabsff 3y ago
  If I want to operate a service on top of the eth blockchain, I have to factor in gas fees as part of the operation costs. That's overhead.
  - pa7x1 3y ago
    Saw this comment too late, sorry. Yes, that's overhead for the operator of the service. But this is not what I was referring to, nor the OP to which I answered. He made the false assumption that the gas fee moves up or down because node operators in the network reflect the costs to settle a transaction in the price, if the costs to them goes up then, he assumed, gas fees go up. This is not how it works. Node operators don't have a mechanism to reflect the costs to settle a transaction in the gas fee. Those two prices are allowed to float independently, then there are some mechanisms coded into the protocol that tend to produce equilibriums so that there is never too much disparity and the network remains profitable.
    - Chabsff 3y ago
      But I'm also that OP whom you replied to and I never once mentioned that gas prices have anything to do with the cost of operating the blockchain. It's only people trying to tell me that the overhead is negligible who seem to be under the impression that low technical overhead means low overhead in general. Gas prices are evidence to the contrary of that.
      - pa7x1 3y ago
        Then you have not understood it. High gas prices are not evidence of high cost (as in the cost to the network to settle the transaction). In a bit analogous way high price of a luxury item is not evidence of its high cost of production. But instead of its desirability with respect to its abundance. Cost and value are two different things. Ethereum blockspace is in high demand with respect to its supply and that drives its value (gas prices), and this is irrespective of its cost to settle that blockspace (energy consumption, HW costs, etc...).
everfree 3y ago
That's not how it works. There's negligible "overhead" to paint a famous work of art, but that doesn't mean the sale price of the art will be negligible too. That's because like fine art, the mechanism that produces block space can only generate a very limited amount per unit time, and latent demand is always orders of magnitude higher than the supply. You can't just flood the market with fresh Ethereum block space any more than you can flood the market with fresh Banksies.
- dale_glass 3y ago
  > There's negligible "overhead" to paint a famous work of art ...no? Duplicating a painting has a huge overhead. Either paying an expert to laboriously reproduce tiny intricacies of the original, or building and programming a robot to do it. And of course you'd have to research all the paints, strokes, etc, involved. > You can't just flood the market with fresh Ethereum block space any more than you can flood the market with fresh Banksies. And that's the overhead, yeah. Even after PoS, it's still a network that doesn't scale. Thousands of computers are doing the same thing, repeating the same calculations and therefore not improving capacity in any way.
  - everfree 3y ago
    > Duplicating a painting has a huge overhead. Duplicates don't sell. This is very similar in crypto - if you duplicate an existing blockchain, its block space doesn't sell. Art - and blockchains - sell because they are original, liquid, come with durable social proof, and have resale prospects and/or utility (real or perceived). > Thousands of computers are doing the same thing, repeating the same calculations and therefore not improving capacity in any way. I think I get what you're saying - if a blockchain were able to run on a single computer, then gas would be very cheap because each calculation would only need to be run once. Current blockchain protocols, of course, do not work like that. So if I might try to paraphrase your argument about overhead, it boils down to "if blockchains did not work the way they do, then gas costs would be cheaper." Which I can't really argue with.

b112 3y ago

Gas costs have no relation to processing power. It wouldn't fluctuate wildly, otherwise. Eth is now POS, a laptop in a corner can now "mine" eth.

pa7x1 3y ago

Absolutely not. The gas fee is not moved up or down based on the cost to settle a transaction. It's an independent market based on supply and demand for blockspace. Supply is constrained because for the network to remain decentralized you need to be able to run a node inexpensively, demand is just a result of value added.

Chabsff 3y ago
If I want to operate a service on top of the eth blockchain, I have to factor in gas fees as part of the operation costs. That's overhead.
- pa7x1 3y ago
  Saw this comment too late, sorry. Yes, that's overhead for the operator of the service. But this is not what I was referring to, nor the OP to which I answered. He made the false assumption that the gas fee moves up or down because node operators in the network reflect the costs to settle a transaction in the price, if the costs to them goes up then, he assumed, gas fees go up. This is not how it works. Node operators don't have a mechanism to reflect the costs to settle a transaction in the gas fee. Those two prices are allowed to float independently, then there are some mechanisms coded into the protocol that tend to produce equilibriums so that there is never too much disparity and the network remains profitable.
  - Chabsff 3y ago
    But I'm also that OP whom you replied to and I never once mentioned that gas prices have anything to do with the cost of operating the blockchain. It's only people trying to tell me that the overhead is negligible who seem to be under the impression that low technical overhead means low overhead in general. Gas prices are evidence to the contrary of that.
    - pa7x1 3y ago
      Then you have not understood it. High gas prices are not evidence of high cost (as in the cost to the network to settle the transaction). In a bit analogous way high price of a luxury item is not evidence of its high cost of production. But instead of its desirability with respect to its abundance. Cost and value are two different things. Ethereum blockspace is in high demand with respect to its supply and that drives its value (gas prices), and this is irrespective of its cost to settle that blockspace (energy consumption, HW costs, etc...).

everfree 3y ago

That's not how it works. There's negligible "overhead" to paint a famous work of art, but that doesn't mean the sale price of the art will be negligible too. That's because like fine art, the mechanism that produces block space can only generate a very limited amount per unit time, and latent demand is always orders of magnitude higher than the supply. You can't just flood the market with fresh Ethereum block space any more than you can flood the market with fresh Banksies.

dale_glass 3y ago
> There's negligible "overhead" to paint a famous work of art ...no? Duplicating a painting has a huge overhead. Either paying an expert to laboriously reproduce tiny intricacies of the original, or building and programming a robot to do it. And of course you'd have to research all the paints, strokes, etc, involved. > You can't just flood the market with fresh Ethereum block space any more than you can flood the market with fresh Banksies. And that's the overhead, yeah. Even after PoS, it's still a network that doesn't scale. Thousands of computers are doing the same thing, repeating the same calculations and therefore not improving capacity in any way.
- everfree 3y ago
  > Duplicating a painting has a huge overhead. Duplicates don't sell. This is very similar in crypto - if you duplicate an existing blockchain, its block space doesn't sell. Art - and blockchains - sell because they are original, liquid, come with durable social proof, and have resale prospects and/or utility (real or perceived). > Thousands of computers are doing the same thing, repeating the same calculations and therefore not improving capacity in any way. I think I get what you're saying - if a blockchain were able to run on a single computer, then gas would be very cheap because each calculation would only need to be run once. Current blockchain protocols, of course, do not work like that. So if I might try to paraphrase your argument about overhead, it boils down to "if blockchains did not work the way they do, then gas costs would be cheaper." Which I can't really argue with.