Abstract
Custom currencies (ERC-20) on Ethereum are wildly popular, but they are second class to the primary currency Ether. Custom currencies are more complex and more expensive to handle than the primary currency as their accounting is not natively performed by the underlying ledger, but instead in user-defined contract code. Furthermore, and quite importantly, transaction fees can only be paid in Ether. In this paper, we focus on being able to pay transaction fees in custom currencies. We achieve this by way of a mechanism permitting short term liabilities to pay transaction fees in conjunction with offers of custom currencies to compensate for those liabilities. This enables block producers to accept custom currencies in exchange for settling liabilities of transactions that they process.
We present formal ledger rules to handle liabilities together with the concept of babel fees to pay transaction fees in custom currencies. We also discuss how clients can determine what fees they have to pay, and we present a solution to the knapsack problem variant that block producers have to solve in the presence of babel fees to optimise their profits.
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Notes
- 1.
- 2.
The UTXO\(_{\text {ma}}\) ledger model is in-production use in the Cardano blockchain.
- 3.
Buyers in this market are the block issuers of the blockchain.
- 4.
In practice this can be the block-issuing rounds.
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Chakravarty, M.M.T., Karayannidis, N., Kiayias, A., Peyton Jones, M., Vinogradova, P. (2022). Babel Fees via Limited Liabilities. In: Ateniese, G., Venturi, D. (eds) Applied Cryptography and Network Security. ACNS 2022. Lecture Notes in Computer Science, vol 13269. Springer, Cham. https://doi.org/10.1007/978-3-031-09234-3_35
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