3.2. Open fee market
Sequentia does not need a pegged bitcoin to function. Any token can be used to pay for fees.
In Sequentia, users can pay fees in any RAS (§4.2) cryptocurrency they choose as long as network participants are willing to accept it. Though Bitcoin pegs are possible, Sequentia does not need a specific peg-in mechanism or any determined token to pay for transaction fees. Therefore, it is not the presence of a Bitcoin peg-in mechanism that qualifies Sequentia as a “Bitcoin sidechain”.
In many blockchains, the impossibility of transferring a token without having a “gas bank” in a native cryptocurrency or peg creates barriers to entry and introduces frictions in user experience, preventing a broader network effect. In Sequentia, block proposers have incentives to accept any token as long as it has a recognized value and sufficient liquidity. They will retrieve and compare the fee values by querying price data from CEXs or DEX oracles. If a transaction is never included in a block, the user may broadcast a new one with Replace-by-fee. To facilitate users’ choice, every block proposer may also signal the list of tokens that will be accepted according to a selection dictated by purely free-market logic. This freedom also improves scalability since there will be far fewer transactions made with the only purpose of providing “gas” to a wallet, which implies higher transaction costs and pollution for the network (UTXO dust).
The fee can tentatively be expressed in the token the user is transferring, or users can attempt to pay their transaction fees with any other RAS token among those available in their wallet. It is expected that most block proposers will accept all major RAS tokens, at least in terms of trading volume against BTC. Since the fee economy is a free market, block proposers have incentives to accept any token as long as it has a recognized value in the market and sufficient liquidity. Otherwise, transactions left behind might be grabbed by the next blocksigner. Simultaneously, the game theory for this mechanism may lead to the rejection of illiquid tokens, constituting an effective spam filter.
Network participants that need to calculate the fee value (e.g., to choose which transactions are more valuable, in case the chain is saturated) will query price data from a centralized exchange (using API) or DEX oracles. It is theoretically possible for network participants to employ a client-side script to manage their staking, wherein they could, for example: cross-check the trading volume of tokens chosen to pay for the fees of transactions currently in the mempool against BTC on a chosen CEX API or DEX oracle, build a block which will collect the highest possible value of tokens that can reliably be exchanged for BTC, and automatically atomic swap all of these tokens for BTC, as soon as the block reward is spendable. Therefore, the network participant could receive a passive income composed solely of BTC in exchange for their SEQ stake.
When preparing a transaction, the wallet UI may suggest a fee amount for each token based on an algorithm that analyzes Sequentia’s mempool and past transactions.