As LTC gains in popularity, we might have a discussion about increasing the block size limit. Less blockchain space means higher transaction fees which can undermine the savings on storage and bandwith. The problem that we have right now is that we can’t change the block size limit without risking a fork. We could solve that problem by having a system to determine the next limit.
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;
Then we can stabilize the fees with this equation:
next 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 for the total amount that was paid on the last block.
Quantity supplied - block size)
We calculate the difference between the amount of space that was provided and the amount of space that would have been provided at the previous price.
/ block occupancy rate
We calculate the excess demand/supply in function of the block occupancy rate.
+previous block size limit
We adjust the limit for the next block.
A long term increase in the avg fee would lead to an increase in the block size limit, we could find an equilibrium between transaction fees and the block size limit.