The power of cheap transactions: Can Solana’s growth outpace Ethereum?<\/em><\/strong><\/p>\nCharging opportunity cost<\/h2>\n Taking people\u2019s money is one way to impose a cost (i.e. decreasing their token balance) but there is another kind of cost: opportunity cost. Taking people\u2019s ability to use their tokens (i.e. their money). <\/p>\n
If we could create a decentralized system for \u201ccharging\u201d people to use the blockchain, not by taking their tokens, but by taking away their ability to use their tokens (for a period of time), then we could allow them to use the blockchain without taking any of their tokens. <\/p>\n
Not only that, but once that period of time is over, they could choose to use the blockchain more, meaning that they wouldn\u2019t have to constantly be buying more tokens just to be able to continue using the application they love. This would dramatically increase user retention and further maximize growth.<\/p>\n
Video game experience<\/h2>\n We now have a mechanism for charging users that doesn\u2019t feel like a fee, but our objective is to deliver a mainstream user experience. Requiring people to consciously lock cryptocurrency tokens before they can use an application is not a mainstream user experience. <\/p>\n
If we can\u2019t require people to consciously lock tokens, that means we need a system that allows people to simply use the blockchain without any thought. All that means is that the system has to decide the size of the opportunity cost instead of the user. Taking this decision out of the hands of the user allows us to design the system so that the size of the opportunity cost is as low as possible, all while maintaining economic sustainability. This gives the user confidence that they are never \u201coverpaying\u201d (even if it is only an opportunity cost) while again maximizing growth by lowering barriers. The cheaper transactions are, the less they feel like fees \u2014 the better the user experience \u2014 and the faster we can expect the user base to grow.<\/p>\n
Of course, the user deserves to know how much of their tokens will be locked if they choose to perform the action. What we want is basically a mana bar from a video game. The user should be able to see how much free usage of the blockchain they have based on the liquid tokens that they have in their wallet. When they go to perform some action that consumes blockchain resources, they should be able to see how much of their mana will decrease when they perform the action. If they find that cost acceptable, they simply perform the action, such as minting a nonfungible token (NFT), their mana is consumed and the right amount of tokens are locked for the set period of time. Wouldn\u2019t that be great?<\/p>\n
The final barrier<\/h2>\n There is one last problem: With the system we have described, the end-user still has to have some tokens in their wallet. Generally, that means that they still have to make a purchase (of tokens) before they can use the application. While we still have a pretty good user experience, telling people they have to spend money before they can use an app is a barrier to entry and winds up feeling a whole lot like a fee. I would know, this is exactly what happened on our previous blockchain, Steem. <\/p>\n <\/figure>\nTo solve that problem, we added a feature called \u201cdelegation\u201d which would allow people with tokens (e.g. developers) to delegate their mana (called Steem Power) to their users. This way, end-users could use Steem-based applications even if they didn\u2019t have any of the native token STEEM. <\/p>\n
But, that design was very tailored to Steem, which did not have smart contracts and required users to first buy accounts. The biggest problem with delegations is that there was no way to control what a user did with that delegation. Developers want people to be able to use their DApps for free so that they can maximize growth and generate revenue in some other way like a subscription or through in-game item sales. They don\u2019t want people taking their delegation to trade in decentralized finance (DeFi) or using it to play some other developer\u2019s great game like Splinterlands. <\/p>\n
We want users to be able to use a specific DApp without having to buy tokens first, and, as always, we don\u2019t want the developer to have to spend any money to make this happen. That last part is tough because the traditional way to solve this problem is by designing the smart contract so that the developer can choose to pay the fee instead of the user. But, remember, we\u2019ve already solved this problem because no one is paying a fee for anything, just an opportunity cost. As long as the developer has tokens, they can choose to pay the \u201cmana\u201d that someone needs to use their application.<\/p>\n
Free for developers?<\/h2>\n But, what if the developer doesn\u2019t want to buy tokens? What if they have an existing application with a thriving user base that the platform would be lucky to attract? It\u2019s in the best interest of large token holders to attract high quality developers to a platform so they can just do the same thing. The stakeholder could let the developer set them (the stakeholder) as the \u201cpayer\u201d of mana for the developer\u2019s smart contracts. <\/p>\n
The stakeholder isn\u2019t losing any money by doing this but they\u2019re still able to deploy <\/em>their capital to support value creation and growth, which is great. If the stakeholder provides their mana to a developer whose app adds tremendous value to the platform, then the value of their token holdings will go up. If the developer\u2019s app doesn\u2019t add value, the stakeholder has an incentive to stop providing their mana to that developer and find someone else who can make better use of their mana. <\/p>\nWe have now figured out not only how to make a DApp free-to-use for the end-user, as an added bonus we have figured out how to make the blockchain free-to-use for developers while giving large stakeholders a way to invest in growth and value creation without sacrificing any of their token holdings.<\/p>\n
Impossible?<\/h2>\n But, all of this is just in theory right? Actually, no. What I\u2019ve described here is exactly how we\u2019re building Koinos. In fact, all of these features are already live on our current testnet with the third and final version of the testnet coming soon. If you want to learn more about mana, you can read the white paper here.<\/p>\n
This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should conduct their own research when making a decision.<\/em><\/p>\nThe views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n\n
Andrew Levine<\/strong> is the CEO of Koinos Group, a team of industry veterans accelerating decentralization through accessible blockchain technology. Their foundational product is Koinos, a fee-less and infinitely upgradeable blockchain with universal language support.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"Cointelegraph is following the development of an entirely new blockchain from inception to mainnet and beyond through its series, Inside the Blockchain Developer\u2019s Mind, written by Andrew Levine of Koinos Group. In my first article in this series, I explained why Ethereum and Steem haven\u2019t been able to deliver a mainstream social decentralized application (DApp). […]<\/p>\n","protected":false},"author":1,"featured_media":8859,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[42],"tags":[],"class_list":["post-8858","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto"],"yoast_head":"\n
Inside the blockchain developers\u2019 mind: Building a free-to-use social DApp | NFT & Crypto News<\/title>\n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n