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Understanding policies

Understanding Gas and Policies in EVM Blockchains

Overview of Gas on EVM Blockchains

  • Gas Units: A measure of computational effort required to execute transactions or smart contracts on the Ethereum Virtual Machine (EVM).
  • Gas Payment in Native Currency: Each blockchain has its own native currency for gas payments. Examples include:
  • Beam: Paid in Beam.
  • Ethereum: Paid in Ether.
  • Polygon: Paid in MATIC.

Challenge: Users Lacking Native Currency

In scenarios where users need to transact but lack the native currency for gas, Beam 'policies' provide a solution, allowing for payments in a specific ERC20 token.

Types of Policies for Transactions

1. Fixed Charge Policies

A set amount of the ERC20 token is charged per transaction, regardless of the gas cost.

  • Economics: While offering stable and predictable costs for users, this model can be financially risky for developers during high gas prices.
  • User: Users benefit from a straightforward and predictable cost structure, making budgeting for transactions easier and transparent.
  • Example: A transfer transaction might be set at 1 $Gold, while a minting transaction costs 10 $Gold. They will always cost the same, regardless of the gas price.

2. Dynamic Charge Policies

Charges in ERC20 tokens are calculated based on the current gas cost, the developer needs to set and exchange rate of ERC20 to wei in native currency.

  • Economics: Aligns transaction costs with real-time gas market prices, introducing variability in costs for the user.
  • User: Users face fluctuating transaction costs, which can be challenging to predict and may require an understanding of gas market dynamics.
  • Example:
  • If the gas price is 20 gwei:
  • Mint transaction: 100 gas units * 20 gwei = 2,000 wei (equivalent to 20,000 $Gold at an exchange rate of 10 $Gold per wei).
  • Transfer transaction: 50 gas units * 20 gwei = 1,000 wei (equivalent to 10,000 $Gold).
  • If the gas price is 10 gwei:
  • Mint transaction: 100 gas units * 10 gwei = 1,000 wei (equivalent to 10,000 $Gold).
  • Transfer transaction: 50 gas units * 10 gwei = 500 wei (equivalent to 5,000 $Gold).
  • Note: Example calculations are for illustrative purposes and should be adapted for production use.

Choosing Between Fixed and Dynamic Policies

Developers must weigh the benefits of simplicity (fixed policies) against the need for adaptability to market conditions (dynamic policies).

  • User Considerations: Given that most users lack in-depth knowledge of gas mechanics, the responsibility of managing price volatility and associated risks ideally lies with the developers.