Original title: Transaction quality trilemma - blockchain killers

Original author: polynya

Original compilation: Kaori, BlockBeats

In October 2021, I wrote a speculative article on the Trading Quality Trilemma. Since then, almost all chains have implemented minimum fees in the range of $0.01 to $0.50, but there are still some chains like Immutable X, Solana or Arbitrum Nova that are unwilling to comply, which gives us some data.

As you know, Im not talking about scaling and infrastructure anymore, the things I wrote in 2021 are already deeply understood and proven, so I dont need to write about them anymore. I think at a time when we have almost unlimited scaling, one-click rollups, and massive data layers within our horizons, its even more critical to delve into the basics of blockchain and write about applications and governance for application developers. EigenDA claims to process 100 MB per second. With stateful compression, this is 5 million TPS on EigenDA, just settling the data on Validiums/Optimiums. But it also means that as scaling goes too far, the deal quality trilemma will once again become an important topic.

Once your transaction fees drop significantly below $0.01, the chain and its infrastructure become vulnerable to spam, DDoS, and micro-MEV attacks. Especially if the chain also has a financial ecosystem. Let’s consider two chains with fees in the sub-$0.01 range – Arbitrum Nova and Solana. For strategic reasons, Arbitrum Nova is promoted more as a gaming and NFT chain, while Solana is more of a cult casino chain. Obviously both have more features, but as far as Im concerned this is their main use. The latter comes with a financial ecosystem that results in a large number of tiny MEV and spam transactions - the low quality transactions I described earlier.

But first there are tiny MEVs. The lower your fees, the more likely low-value MEV opportunities will be. People rush to seize these opportunities, resulting in many deals falling through. Even Solana and Arbitrum Nova have the lowest fees, but other chains may try lower fees, which could end up causing over 99% of transactions to fail, be garbage, and be worthless.

Now, some might say, what’s the problem? Let them spam attack chains to their hearts content. There are two big problems:

Sustainability and cost: Spam is shared across the entire network, and historical data can accumulate into petabytes in a short period of time. Innovations like validity proofs can significantly reduce the computational burden, but are still a linear cost for sequence generators/builders, and historical data remains the ultimate bottleneck. By simply not processing worthless transactions, the marginal cost of legitimate transactions becomes cheaper - by orders of magnitude for chains where >90% of transactions are junk, tiny MEV, or failed. Its easy to push these issues aside in the short term, but in the long term they can become Achilles heel.

$0.01 is too expensive for some use cases: Some use cases require free transactions. If you make a $100 DeFi trade, the difference between $0.01 or $0.001 is insignificant, but if you take action in an on-chain game or social network, the difference between $0.001 and $0 is everything.

It is therefore clear that we need solutions to the transaction quality trilemma. This brings us to Immutable X and Sorare, which are by far the best solutions. They offer free transactions but use a Web2 style approach to spam mitigation. The key is to provide an alternative path to censorship resistance, which comes at a cost. This way, you get the best of both worlds - free transactions for those who need them, but censorship resistance for edge cases. Ideally, you might want to offer free transactions while being censorship-resistant, but this is harder to solve.

The key to achieving this goal is:

a) State isolation

b) Spam mitigation.

a) is critical, otherwise youll end up with tiny MEV and irrelevant spam. In theory, this could be done within a chain (L2 or L1), but currently it is best implemented on L2, as shown by Immutable X and Sorare.

The obvious drawback here today is the lack of composability, but the solution might be restricted composability with other L2/L1s. Its also worth considering that almost every conceivable use case that requires zero-fee microtransactions simply requires composability - social, gaming, etc.

Spam mitigation is an open problem - I feel there is a lot of research and engineering work to be done in developing the best solution. I suspect this will require a tailor-made solution to fit the specific application.

Finally, for chains oriented towards high-value financial transactions, they may have an acceptable lower limit on fees around $0.01. This is enough to include almost all valuable transactions while reducing minimal spam or tiny MEV. I dont know what the optimal number is, but its probably in the range of $0.01 to $0.10.

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