depricate fees, ordering slides

syllabus/3-Blockchain/X-Resource_Allocation_Fees_Ordering_slides.md

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+---
+title: Fees, Ordering
+description: Fees and ordering in blockchains
+duration: 1 hour
+---
+
+# Fees, Ordering
+
+TODO Determine if any of this can / should be re-used.
+If so, find it a home, probably in the econ and game theory lecture.
+
+---
+
+## Overview
+
+<pba-flex center>
+
+1. [Fees and ordering](#fees--ordering)
+1. [Execution models](#execution-models)
+
+</pba-flex>
+
+Notes:
+
+- This lecture is a bit all over the place.
+- A bunch of stuff worth covering, but not all directly related.
+
+---
+
+# Fees & Ordering
+
+---
+
+## Fees & Ordering
+
+Blockchains are open, shared systems.
+They are unrestricted in access.
+
+But restricted in resources.
+
+---
+
+## Permissionless Access
+
+Free _ability_ to access does not mean free _cost_ to access.
+
+---
+
+## Threads
+
+A blockchain runtime is single-threaded.
+
+(For now)
+
+---
+
+## Time
+
+A block must terminate in some amount of time.
+
+---
+
+## Network
+
+Besides execution time, blocks need to propagate throughout the network.
+
+---
+
+## Demand
+
+Many people may want to use the system concurrently.
+
+But the system needs to decide:
+
+- Which state transition calls to include in a block, and
+- How to order them.
+
+---
+
+## Brief Interruption #1
+
+> The block body contains an ordered set of _extrinsics_: Packets from the outside world with _zero_ or more signatures attached.
+
+Notes:
+
+Recall from Lecture 1.
+
+---
+
+## Brief Interruption #1 (cont.)
+
+These packets include:
+
+- A call to the system's state transition function
+- Some contextual information (e.g. a spec version)
+- Perhaps some additional information that would help block authors prioritise
+
+---
+
+## No-Longer Brief Interruption #1 (cont.)
+
+Consider packets with:
+
+- zero signatures attached as "inherents" or "unsigned extrinsics"
+- one or more signatures attached as "transactions"
+
+This will be pretty straightforward until it's not.
+
+---
+
+## Fee Models
+
+Different blockchains have different fee models.
+
+For this lecture, we will look at three:
+
+- Size (Bitcoin)
+- Step Metering (Ethereum)
+- Time (Polkadot)\*
+
+\* (and coming soon, space)
+
+---
+
+## Size
+
+Bitcoin has a very simple STF: Namely verifying signatures and reassigning UTXOs.
+
+Its block size is limited, and each transaction has some byte-length (instruction, signature, etc.)
+
+Block authors will normally choose the set of transactions that would yield the highest gross fee.
+
+---
+
+## Bitcoin Fee Market
+
+<img style="width: 800px" src="./img/3.3-fees-bitcoin-average-fee.png" />
+
+Notes:
+
+- Fee market evolves based on demand
+
+[Source: Y Charts](https://ycharts.com/indicators/bitcoin_average_transaction_fee_btc)
+(Couldn't find the chart I really wanted (per-byte rate), but can discuss)
+
+---
+
+## Metering
+
+Ethereum has a more complex STF than Bitcoin, namely one that is quasi-Turing-complete.
+
+Users could submit transactions with an unknown number of steps to terminate.
+
+The system uses "gas metering" to halt execution of a transaction and continue to the next.
+
+---
+
+## Metering
+
+Ethereum's STF defines a VM with instruction set, where each instruction costs some "gas".
+
+Users specify:
+
+- Max amount of gas to use
+- Cost, in ETH, per unit of gas they are willing to pay
+
+---
+
+## Metering
+
+Each time an instruction is executed, the system deducts its cost from the max gas.
+
+If the program terminates, it only charges for the gas used.
+
+If it runs out of gas, it terminates the program.
+
+---
+
+## Gas Rates
+
+<img style="width: 800px" src="./img/3.3-fees-ethereum-average-gas-price.png" />
+
+Notes:
+
+[Source: Etherscan](https://etherscan.io/chart/gasprice) <!-- markdown-link-check-disable-line -->
+
+---
+
+## Weight
+
+Instead of metering during runtime, meter ahead of time.
+
+Charge a fixed\* fee for dispatching some call.
+
+---
+
+## \*Fixed
+
+```rust
+#[pallet::weight(100_000_000)]
+fn my_variable_weight_call(input: u8) -> Refund {
+	let mut refund: Refund = 0;
+	if input > 127 {
+		let _ = do_some_heavy_computation();
+	} else {
+		let _ = do_some_light_computation();
+		refund = 80_000_000;
+	}
+	refund
+}
+```
+
+---
+
+## Time
+
+Weight is picoseconds of execution time (`10E-12`).
+
+Calls are benchmarked on some "standard hardware".
+
+(There are some changes in the works about making two-dimensional weight.)
+
+---
+
+## Weight
+
+Using weight reduced the overhead of runtime metering, but requires some more care from developers.
+
+- It must be possible to meter before runtime
+- So, users should not be able to deploy untrusted code
+- There is no safety net on execution
+- Some computation is OK, but should be possible from call inspection
+
+Notes:
+
+Examples:
+
+- User-supplied length of a list that will be iterated over
+- Number of calls within a batch
+
+---
+
+## Brief Interruption #2
+
+Some of the gas and weight systems are evolving.
+
+- Ethereum recently added EIP1559, which uses a fee + tip mechanism
+- Parity and Web3 Foundation are discussing some changes to the weights model
+
+---
+
+## Fee Strategies
+
+Block authors can include transactions using several strategies:
+
+- Just take those with the highest fee
+- Take those with the highest fee to {length, gas, weight} ratio
+
+---
+
+## Fee Burning
+
+Not all the fees must go to the block author (depends on system design).
+
+In fact, this is often a bad design. Block authors will want fees to go up, so may indulge in no-op transactions to boost fees.
+
+---
+
+## Fee Burning Examples
+
+- Polkadot only gives 20% of fees to block authors (80% goes to an on-chain Treasury)
+- Since EIP1559, Ethereum burns some of its fees (its "base") from each transaction
+
+In both systems, users can add "tips" to increase the priority of their transaction with authors.
+
+---
+
+## Filling a Block
+
+Depending on the limiting factor, systems can have different limits to call a block full.
+
+- Bitcoin: Size (in bytes)
+- Ethereum: Gas limit (sum of all gas limits of transactions)
+- Polkadot: Weight (sum of all max expected weights)
+
+---
+
+## Ordering
+
+We've selected some transactions, but the runtime is single-threaded.
+
+Block authors must order them.
+
+---
+
+## Priority Basis
+
+The naive solution is to maintain an order of pending transactions by some "priority".
+
+And just include the top `N` transactions that fit in a block.
+
+---
+
+## More Advanced
+
+But, many small transactions might result in a higher fee for greedy block authors.
+
+So there could exist a set of transactions that is more profitable than just the top `N`.
+
+Even some that could be considered attacks.
+
+---
+
+# Execution Models
+
+---
+
+## Transactional Execution
+
+Most blockchains have a "transactional" execution model.
+
+That is, they need to be woken up.
+
+A smart contract, for example, won't execute any code unless someone submits a signed, fee-paying transaction to the system.
+
+---
+
+## Brief Interruption #3
+
+All of the "packets from the outside world" in these systems are signed.
+
+Some key holder signs an instruction that authorises a call and is willing to pay for its execution.
+
+Now is the time to enter the world of unsigned packets.
+
+---
+
+## Free Execution
+
+State machines can have autonomous functions in their state transition function.
+
+System designers can make these functions execute as part of the STF.
+
+In this model, block authors _must_ execute some logic.
+
+---
+
+## Free Execution
+
+These added function calls are powerful, but some care must be taken:
+
+- They still consume execution resources (e.g., weight)
+- They need some method of verification (other nodes should be able to accept/reject them)
+
+---
+
+## Hooks
+
+The Substrate lectures will get into these, but for now just a look at some APIs:
+
+```rust
+pub trait Hooks<BlockNumber> {
+	fn on_finalize(_n: BlockNumber) {}
+	fn on_initialize(_n: BlockNumber) -> Weight {}
+	fn on_idle(_n: BlockNumber, _remaining_weight: Weight) -> Weight {}
+	fn on_runtime_upgrade() -> Weight {}
+	fn offchain_worker(_n: BlockNumber) {}
+}
+```
+
+[Source: `/frame/support/src/traits/hooks.rs`](https://github.com/paritytech/substrate/blob/33c518e/frame/support/src/traits/hooks.rs)