Fixed fee

A single fixed fee amount that is charged across any transaction

A fixed fee means that the cost of a transaction is the same regardless of the value of the transaction. Fixed fees have the inherent problem that they tax the poorest people in the network the most and give the most benefit to the wealthiest individuals who create the largest transactions. Smaller transactions mean a higher proportional fee when compared to larger transactions that benefit from a smaller proportional fee. To make an ecosystem more egalitarian it is desirable to minimise this fixed fee as much as possible to reduce the unfair economic impact that this fee can have on poorer users.

Very low taxation fairness (Score - 1)

Fixed fees tax the poorest the most whilst rewarding the richest the most due to the differences in the percentage cost for transacting with different amounts of money. The percentage amount that someone pays in fees would decrease as the transaction value increases. A fixed fee approach can make it easier for people with more money to sustain a larger amount of money as they proportionally would pay less than anyone else when making high value transactions. The individuals with the least amount of money would have the hardest time trying to increase their wealth due to the higher proportional fee cost on smaller transactions.

Moderate incentive complexity (Score - 3)

Fixed fees create an incentive for users to batch their transactions into a single transaction whenever possible to minimise the cost to use the network. This is a desirable outcome as it incentivises efficient usage of the network.

Individuals that have larger amounts of money have an incentive to take advantage of the cheap fees by making many smaller transactions if that means they could achieve any form of edge or advantage financially. Individuals with more money are better able to exploit their position of being able to benefit from cheap transactions relative to the wealth that they are transacting with. The fixed fee must be high enough to fully cover the operational costs as otherwise this can become an attack vector where people could attempt a denial of service attack.

Poorer individuals in the ecosystem could have an incentive to migrate to other ecosystems if those networks have lower transaction fees. Individuals that only have a small to modest amount of money will represent the majority of a network's population as there are only so many people that can have large amounts of the network's coin. A network would likely fail over the long term if it is not able to reduce its transaction fees and effectively compete with other networks.

Moderate network risks (Score - 3)

There are network risks for situations where individuals with more money have an increasing percentage of the supply over time. This is a problem because the network fees they generate for the network wouldn’t necessarily increase as larger value transactions do not lead to more transaction fee income. More wealth in less hands could mean less transaction volume and therefore less transaction fees being generated to pay for node operators. There is an ongoing risk that the individuals with the least wealth find cheaper alternatives, this could jeopardise the viability of the network over the long term if the fixed fees are not as low as competitors.

Total score = 7 / 15