Multi-Dimensional Blockchain Resource Pricing with Abdou Ndiaye | a16z crypto research talks

TL;DR

Public economics teaches us valuable lessons for pricing blockchain resources, focusing on minimum fees, resource scarcity, and revenue diversion to ensure efficiency and balance between private utility and social costs.

Transcript

good morning everyone welcome to today's a16z crypto research seminar I'm very pleased to introduce uh professor at the business school in NYU at do enjoy and he'll be talking about a topic that's definitely quite near and dear to my heart namely pricing uh lots of space in particular multi-dimensional settings great uh thanks for having me um this... Read More

Key Insights

• 🤱 Pricing blockchain resources requires considering minimum fees and scarce resources.
• 👋 Public economics teaches us to prioritize pricing on necessary and final goods.
• ❓ Price adjustments should reflect demand and price elasticities to ensure efficiency.

Questions & Answers

Q: What is the motivation behind pricing blockchain resources at the protocol level?

Pricing resources at the protocol level helps ensure efficiency and balance between private utility and social costs. It also allows for the diversion of minimum revenue for security and other purposes.

Q: How can we determine the level of granularity for multi-dimensional pricing?

The level of granularity should capture final consumer resources and focus on goods that are in high demand across user balances. It's important to consider the empirical criterion and measure constant returns to scale for resource combinations.

Q: Why are price adjustments necessary for multi-dimensional pricing?

Price adjustments help minimize deadweight loss and ensure productive efficiency. By adjusting prices based on demand and price elasticities, resources can be priced more accurately and efficiently.

Q: How can we measure demand elasticities in the blockchain context?

One proposed approach is to introduce exogenous random variations in supply to capture short-run demand elasticities. By adjusting the parameters based on past block sizes and relative demands, we can better reflect market dynamics.

Summary & Key Takeaways

• Blockchain resource pricing involves setting prices at the protocol level and determining minimum fees.

• Public economics teaches us that minimum fees are necessary in certain situations and that scarce resources should be prioritized for pricing.

• Price adjustments should consider the level of granularity, the demand for different resources, and the need for price elasticity measures.

• It is important to find ways to measure demand elasticities and adjust prices based on exogenous random supply variations.