Most other cryptocurrencies, including our predecessor blockchains (Bitcoin, Dash, and Pivx) have higher fees, based on the size of the transaction, usually measured in something like “Satoshis per Kilobyte”. Divi’s formula is different, based primarily on the transaction amount, with the size as a secondary multiplier. This keeps our fees cheap, and makes DIVI work for micropayments such as if you were to pay for song views.
Our Fee Algorithm is as Follows
Fee = TV * TVM * TS / TSM
TV = Transaction Value
TS = Transaction Size
TVM = Transaction Value Multiplier
TSM = Transaction Size Multiplier
Maximum Fee is 100 DIVI.
Minimum Fee is 10,000 Satoshis/KB. (0.0001 DIVI/KB)
Divi’s transaction fees are burned, not given to miners/minters.
DVS For Fees
Upon launch, we have DVS (Dynamic Value Sporks) set up for several fee algorithm variables, with the following initial settings:
TVM (Transaction Value Multiplier) = 0.0001
TSM (Transaction Size Multiplier) = 300
Maximum Fee = 100 DIVI
Minimum Fee = 0.0001 DIVI/KB
If we find that the fee structure doesn’t work, or the network is under attack, we can use DVS to nearly instantly change these values across all the nodes.
How We Picked Initial Values
TVM: We wanted to make sure our transactions were very cheap so they could be used for micropayments. So with this value, a simple transaction of around $1000 would still only cost 10 cents to send.
TSM: 300 bytes is around the average size of a transaction. Depending on how many UTXOs are used, it can grow larger. With multisig transactions and other opcodes starting to play a role in the future, the average transaction size will grow. More complicated transactions will cost more, but will still be relatively cheap. Also, notice that the way the algorithm works, a transaction that's double the size is also exactly double the fee.
Maximum Fee: With the DIVX price at around US$1.00 at the time of this writing, and we having no idea what it will be after launch, we decided to set this too 100 DIVI so that the max fee would be approximately US$1. That means that if you send US$10,000 worth of DIVX to someone, it will probably cost around US$1. Larger transactions won’t cost more. Our intention is to keep the maximum fee at around US$1. However, if inflation becomes an issue for DIVI in the future, this is one way that it can be controlled.
Keep in mind that the Divi network is really a beta. We have a lot of technology to add in the coming months after launching our mainnet. There are many factors and tradeoffs that may bring up challenges, so expect that we may make changes. During the beta phase, which will last several months at least, the DVS values will be under centralized control by the Divi team. Once we have a stable ecosystem, we’ll be able to give control to the community by votes within governance.