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Comment by ShamelessC | Hacker News Reader

> There were other issues standing in the way of the DAO’s egalitarian ambitions. As VICE’s Motherboard points out, the median ConstitutionDAO donation was $206.26. Those small-dollar donors are seeing most or all of their refunds getting eaten up by Ethereum network gas fees, which remain static regardless of the size of the transaction.

This is kind of insane to me. People were shilling ConstitutionDAO _pretty_ hard on here back when this happened. My biggest concern was this was a scam, or that people would use the opportunity to scam in some fashion (still a reasonable theory). Instead, it turns out their supposedly superior financial system can't even handle refunds? Come on.

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The scam is the Ethereum ecosystem itself. It succeeded once again in pulling in a few more millions of real money from retail investors who won’t see their $200 donations again.

Where did the money go? It provided liquidity to the top of the pyramid, of course.

> investors [...] donations

one of those is the wrong word.

I generally disagree that willing participants who gave their money without expectation of future return are getting fleeced in this particular project.

You don't need to look far to find rugpulls https://twitter.com/RugDocIO regularaly tweets out ongoing rugpulls.

Interestingly though after a technical change in where gas/txn fees go (EIP-1559) any payment of fees actually does go to all holders of ETH proportionally due to fees fueling deflation. Of course even still this is not like a traditional pyramid scheme, but more similar to stock buy backs being fueled by each individual sale that a company makes.

Side note, the term “gas fee” is a nice example of how crypto projects pick needlessly obtuse vocabulary. It’s a transaction fee. There’s no “gas” involved. Why call it that?

Perhaps I’m jaded but my feeling is that using plain terms would reveal the emptiness of the space. A non technical person can see that a $200 “transaction fee” is a rip off.

Jargon is inevitable.

Have you ever listened to an investment banker in their native habitat?

Gas (as in a car) is a useful analogy to the function of this fee in the protocol.

Transaction fee implies something else all together.

Something else like what? It's a transaction and you pay a fee, what's wrong with this explanation?

Since you asked, here's where the terminology comes from.

The Ethereum VM has a bunch of different opcodes, some physically more costly than others. To account for this, each opcode has its own "gas cost." Storing a value costs much more gas than adding two values.

The gas price is the current price in ETH for one unit of gas. The gas price fluctuates with demand.

The transaction fee is the total ETH paid for your transaction. If you have a complex transaction that executes a lot of expensive opcodes, you will have a higher transaction fee than someone doing something simpler, even though you're both paying the same gas price.

Sounds like the quote from the article is using the term "gas fee" to refer to the overall transaction cost. At least I don't see any reason why someone would specifically car about the gas fee portion of the overall fee in the context of losing most of the money in the refund process.

Users focus a lot on the gas price since it's a consistent indicator of the cost to transact, so they've tended to use the terms "gas fee" and "transaction fee" interchangeably. Your transaction fee is used entirely to buy gas, which is spent in running your transaction.

Gas fees are high because there's so much demand for limited block space. This is being addressed by moving things to rollups, and later by expanding rollup capacity with shards. Some stuff is in production on rollups already, but everything's in flux because the tech is still improving at a rapid pace.

Rollups take transaction capacity from a couple dozen transactions per second to a couple thousand, and sharding will multiply rollup capacity by a factor of twenty initially, and significantly more later as hardware improves.

> This is being addressed by moving things to rollups, and later by expanding rollup capacity with shards.

First, it may be worth considering that non-crypto people don't know or care about any of this jargon. Anyway, I hope it works. To me it just sounds like deferring trust to smaller but faster institutions/coins with proven track records. Doesn't seem all that different from the current financial system. At any rate, there are more issues than just gas fees.

Rollups are a way to compress the storage space required by a transaction. They store the compressed versions on chain, and there are cryptographic guarantees that everything is correct and that users can withdraw funds to regular on-chain accounts.

Shards expand the storage available, by making it so that individual nodes can store just a portion of the total stored data. Each shard gets the full security of the main chain.

The issue with refunds was that gas costs were high and many contributions were small, so that issue at least would be solved as scaling improves.

Thank you for clarifying the specifics. Sounds unnecessarily complex, to say the least.

If you have a simpler way to achieve 100,000 tx/sec in a large decentralized network with strong security, then you should probably publish it. The alternatives I've seen so far achieve scaling by sacrificing decentralization.

I have no such need for a large decentralized network responsible for handling my money as I have access to regulated (albeit not enough) financial institutions in the US and USD.

IPFS/BitTorrent/Matrix is cool though. Can any of this research help in those areas?

The networking technology from IPFS/etc will likely be helpful. Something a little different about Ethereum shards is that it needs stronger guarantees on data availability. On the other hand it's less ambitious in terms of total storage capacity.

I tend to get heavily downvoted here whenever I suggest that Ethereum might be useful for something, so I tend to keep my comments strictly technical. But I'll take a chance and say that Uniswap, for example, is a pretty interesting financial innovation with no equivalent in legacy finance. And just the other day, the International Emissions Trading Association published a statement saying:

> Digital tools hold the potential to revolutionise monitoring, reporting and verification, and they offer new means for highly secure, transparent and globally accessible registry infrastructure. There are also innovations in asset formation, such as issuing carbon credits in the form of digital credits or native tokens secured on a public blockchain.

https://www.ieta.org/page-18192/12286504

I appreciate the accurate summary of the technology and scaling solutions you provided.

It would be refreshing to see this community actually have a dialogue on the tech.

I'm sure it can improve in the future, but it seems that at the moment Ethereum is very unsuited for small transaction style fundraising, like this. The level of transaction fees is orders of magnitude higher than other options (heck in some countries the fees to move money to another bank account is 0)

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