3.2. Open fee market

Sequentia does not need a pegged bitcoin to function, and does not have any form of native coin. Any token issued in Sequentia can potentially be used to pay for network fees.

On the Sequentia network, users can pay transaction fees in any RAS (§4.2) token they choose as long as block producers 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, and in contrast with most other Bitcoin sidechains, Sequentia is not qualified as a “Bitcoin sidechain” due to the presence of a Bitcoin peg-in mechanism.

In many blockchains, the requirement for users to have a “gas bank” in a native cryptocurrency (or peg) in order to transfer any other token 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 fee values by querying price data from CEXs or DEX oracles. If a transaction is taking too long to be included in a block or seems like it might never be included, 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).

Fees 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.

etwork participants that need to calculate fee values (e.g., to choose which transactions are more valuable, in case the network is saturated) will query price data from a centralized exchange (using API) or DEX oracles. It is hypothetically possible for block producers to employ a client-side script to manage their staking node, 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, block producers could potentially receive a passive income composed solely of BTC to reward their SEQ stake, whilst simultaneously enabling users to pay transaction fees using a wide variety of assets, and facilitating these assets’ direct exchangability for BTC.

When preparing a transaction, a wallet’s UI may suggest a fee amount for each token based on an algorithm that analyzes Sequentia’s mempool and past transactions.