Nicolas, CTO of the Stellar Foundation, explains how Stellar's fee mechanisms evolved from basic bidding to sophisticated multi-dimensional resource pricing, including Cap-5, Cap-42, and Cap-46-07, to balance network sustainability, fairness, and scalability while preventing spam and ensuring equitable access.
Nicolas, CTO of the Stellar Foundation, discusses the evolution of Stellar's fee design across multiple protocol upgrades. Starting with the original 2014 model using transaction bidding and the knapsack problem, he explains how Cap-5 (2018) introduced Vickrey auction mechanics to simplify client fee prediction. Cap-42 (2024) partitions trading from payments to prevent arbitrage spikes from inflating fees for regular users. Most significantly, Cap-46-07 introduced multi-dimensional resource pricing for Soroban smart contracts, separating historical price discovery from block construction and using social value rather than resource consumption to determine fees. The talk emphasizes that fees serve essential functions: preventing spam, creating proper incentives, and enabling network sustainability, while demonstrating that thoughtful protocol design can achieve both fairness and scalability.