As LTC gains in popularity, we might have a discussion about increasing the block size limit. Less block space means higher transaction fees which could reduce LTC’s utility. As of now, the limit does not accomodate the needs of the users. We could solve that problem by having an adjustable block size cap.
If we assume that a change in the avg fee means there’s a change in the demand for block space;
If we assume that the fee revenue is constant;
If we assume that the block occupancy rate is constant;
Then we can stabilize the fees with this equation:
new block size limit = (fee revenue / avg fee on the previous block - block size) / block occupancy rate + previous block size limit
We’ll explain the equation step by step.
(fee revenue / avg fee on the previous block
We calculate the amout of space that would have been provided at the previous price.
Quantity supplied - block size)
We calculate the excess demand/supply without considering the block occupancy rate.
/ block occupancy rate
We calculate the excess demand/supply considering the block occupancy rate.
+previous block size limit
We adjust the limit for the next block.
This system could reduce the wait for confirmations in peak periods while allowing miners to generate income when there’s a low activity on the network.