June 29, 2023

Gas Fees: The Original Sin Hindering Mass Adoption | SKALE

Conner Murphy

VP of Strategy, Head of Sales

Blockchain's Pay-As-You-Go Model is Broken

Since its inception, blockchains have been held in the vice grip of a pay-as-you-go model, a gas fee system that served as a necessary evil but one that has not aged gracefully. As we step into an era of exponential growth and adoption, we must address this problem that will otherwise hold us back from reaching its potential.

Blockchain is a revolutionary technology for developers and users alike. With the promises of decentralization, security, and ownership, it almost feels too good to be true. Unfortunately, due to the inherent gas-fee economic model, which could be likened to a one-lane highway during rush hour, blockchains have fallen short of these promises. What was designed to balance supply-demand within the ecosystem has instead acted as a chokepoint, impeding the flow of transactions and blockchain’s true potential.

Monolithic Chain’s Scaling Issues

The crux of the scaling issue lies in the architecture of traditional blockchain technology - monolithic, permissionless chains with inherent limitations in supply. While this framework was viable at its inception, it has given birth to the gas fee model and the associated challenges we face today.

Gas fees fluctuate based on network congestion, serving dual purposes in the blockchain ecosystem. First, they incentivize validators to maintain the network, and second, they act as an in-built protection mechanism against Distributed Denial-of-Service (DDoS) and SPAM attacks. By attaching a price to every computation or transaction on the blockchain, gas fees disincentivize frivolous or malicious activity, thus adding a layer of security to the system.

But while these protective measures and incentives are critical for the stability of the network, they falter in balancing supply (network capacity) and demand (user transactions) effectively. The result? Periods of exorbitantly high gas fees that deter users and hinder developers from building scalable applications. It's a conundrum that echoes the age-old “tragedy of the commons” in a digital realm.

Consequently, what began as a well-intentioned mechanism for maintaining network security and validator compensation has morphed into a substantial roadblock for users and developers, stunting the widespread adoption of blockchain technology.

The Power of Modularity: Embracing Limitless Horizontal Growth

Earlier, we likened traditional blockchains to a one-lane highway during rush hour – constricted by a limited number of lanes. SKALE's native multi-chain model, currently comprising 20+ SKALE chains, is more like a sprawling network of freeways: Each new chain added to the network opens up a new "lane," accommodating more users and applications without causing congestion. This uncapped supply of chains allows the network to expand dynamically as more developers join the ecosystem.

This expansive supply model is a fundamental shift in blockchain economics. It eradicates the need for fiat-pegged gas fees, a fixture in the traditional single-chain model, as there's no need to throttle demand within an uncapped supply architecture. And it's a win-win: Developers gain access to scalable resources at predictable costs, while validators are compensated for their contributions to the network. This model fosters a more sustainable and harmonious ecosystem, driving growth and innovation in the blockchain industry.

SKALE Network: A Paradigm Shift

The SKALE Network provides a transformational shift for developers seeking an escape from traditional blockchains. With its innovative horizontal scaling and ‘Unified Validation’ economic structure, SKALE offers a radical departure from the conventional pay-as-you-go gas-fee model.

Due to SKALE’s horizontal scaling approach, SKALE chains can be provisioned at a moment's notice, relieving the capped supply typical of other networks. This modular architecture creates an innovative economic approach, which allows developers to "rent" a SKALE chain from the network, akin to reserving server capacity on Amazon Web Services (AWS).

SKALE’s block space rental model has redefined the concept of blockchain validation. In contrast to traditional validation models, where validators compete against each other,

SKALE's 'Unified Validation' encourages validators to work cohesively as a team, earning monthly returns (in SKL) for their contributions. This cohesive approach allows validators to focus on maintaining network security and integrity rather than undercutting each other.

This Unified Validation model and modular architecture make it possible to offer ‘zero gas fee’ transactions to end-users. However, security concerns inevitably arise. How does SKALE deter malicious attacks without gas fees? This is where SKALE's native currency, sFuel, plays a vital role. Developers (chain renters) are granted sFuel to distribute to end-users to use their applications (smart contract executions). SKALE deters DDoS and SPAM attacks effectively by using sFuel as a rate limiter. This mechanism ensures a secure environment for developers and users without compromising the network's performance or scalability.

The result? The best unit economics in the industry for developers, users, and validators alike. SKALE ensures optimal network performance and security while providing developers with an efficient and predictable cost structure, liberating them from the unpredictable nature of gas fees.

The Future: Unleashing Creativity with Open Highways

SKALE doesn't just solve the problem of gas fees; it unlocks the door to a world of unlimited possibilities. It empowers developers to dream bigger, to imagine a world where novel game mechanics and microtransactions are possible and where user experience is at the forefront. It does all this without disrupting validator incentives to keep the network running smoothly.

In a world increasingly moving towards digital currencies and decentralized technologies, SKALE's revolutionary economic structure offers a timely and much-needed paradigm shift. It's not just about fixing what's broken; it's about building something better, more efficient, and scalable. Now if only we could fix highway traffic like SKALE fixed gas fees!

About SKALE

SKALE is the world's fastest blockchain, designed for fast, secure, user-centric Ethereum scaling. SKALE chains offer zero gas fees to end-users and have advanced features such as on-chain file storage, interchain messaging, zero-cost minting, ML/AI smart contracts, and enhanced security features.

The SKALE network enables developers to deploy their own EVM blockchain in minutes without sacrificing speed, security, or decentralization. Welcome to the SKALEverse.