Discussion around a Proposal to change gas fees

Proposals
1

Various members of the community have brought up a high price of gas as a barrier to entry into the Archway network. There were two possible solutions brought to the table by the community. This document is an assessment of the two possible outcomes, which has been contributed to by core contributors and community members alike.

Hard Fork to reduce the ARCH denomination by a factor of 10:

Arguments for:

  • Aid community perception on the spend amount for gas fees by lowering the denomination. (Even if the cost in USDC is the same, it is more appealing to spend .3 ARCH as opposed to 3 ARCH on a transaction).

Arguments against:

  • A hard fork entails state export, transformation and reimport… however, any changes resulting in non-fungibility of assets (such as reducing circulating supply, as this is in effect a redenomination) will result in state import failure as assets may be accounted for off-chain due to IBC transfers.
  • A similar issue to the above occurs regarding smart contracts that track their own transactions and state: an example would be, that a hard fork would invalidate any vesting or liquid staking type contracts that need to track assets, staking and staking rewards, or result in consensus failures as state would be irreconcilable.
  • A hard fork and redenomination would also go against the ethos of immutable blockchain as you will have to seize assets from users and reissue a new replacement asset.

Lowering mPoG:

Arguments for:

  • Enhance the competitiveness of Archway apps compared to similar products by making it comparable in cost per tx.
  • Reduces the cost for a user to utilize the network or application.
  • Reduces the cost of utilizing or operating public goods infrastructure on a per tx basis.
  • Developers can utilize a smart contract premium to make up for the change in mPoG, in such case they would actually capture more value as a result (keep 100% of premium vs 50% of consensus fee).
  • Already considered expensive to use the network at current ARCH price / mPoG level — cost to utilize network will only continue to increase as ARCH appreciates.
  • Even after reducing mPoG substantially, Archway would still have one of the highest consensus fees in comparison to competitors in the Cosmos.

Arguments against:

  • Lowering mPoG lowers the amount of ARCH getting burned from txs on-chain, reducing the impacts of the counter-inflationary mechanism counter inflation.
  • Reduces fee split received for dapp developers, which need to be and look attractive to get more dapps over to our ecosystem.
  • The USD value of gas is actually underneath what was planned out originally. Archway is already competitive with anything outside of Cosmos, and shouldn’t need to compete with similar chains in Cosmos for super low gas.
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2

Thanks for the comprehensive summary of options.

The consensus from the expert speakers from the latest governance call is against a hard fork, and for now not to bother about lowering mPoG. I would agree with this view as there was sound rationale that supports it from both a technical and token economics perspective.

From the end-user community perspective, it seems to be more of a psychological barrier that in some cases there is the need to spend a few full tokens on a transaction.

I believe that more can be done from an education perspective to overcome such barriers. For instance, here’s a link that provides some indicative fees in USD terms on what it costs on popular L2s outside of the Cosmos ecosystem: https://l2fees.info/.

Additionally, material that provides a better understanding of dApp sustainability, network sustainability, and value capture could help.

I expect part of the education to be addressed by the Markering DAO, as well as dApp builders and the core contributors of Archway.

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