Former Ripple CTO David Schwartz has recently explained the reasons why transaction fees on the XRP Ledger (XRPL) suddenly increase when network activity increases. This comes as XRPL network activity reaches unprecedented levels, with continuous transactions exceeding 200 per ledger.
Schwartz’s comments came after a report from Vet, a dUNL validator for XRPL, which observed a high volume of activity on the network.
Transactions have remained consistently above 200 per ledger only a handful of times in XRP’s history, and the network was again heading towards that milestone. On March 23rd, XRPL processed 190 transactions in a single ledger, a one-year high.
Some critics also raised some issues, which included that the network had a high load factor the previous night, which increased the fees. On March 23, the fees for XRP increased to over 1,400 drops due to the peak demand.
According to Schwartz, the fees rise as a result of a situation where the transaction demand goes higher than the network can comfortably process. This includes a situation where the difference between demand and network capacity, however small, goes above 200 transactions per second.
Ripple Validators Control XRP Fees
Validators are also instrumental in controlling the flow of transactions. Schwartz explained that the network does not operate at the speed of the fastest or slowest validator. Instead, it is operated at a speed agreed upon by all the validators, sometimes requiring a majority or even up to 80%.
He also added that the configuration of validators is important. “If a server is already close to capacity and suddenly sees a huge increase in transactions, it could fall behind even without a fee increase. The fee should rise at the right time, not too early, or it will slow down the transaction, and not too late, or it will overload the network.”
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XRP Fees Adjust Dynamically
Schwartz said each validator will make an estimate of the transaction limits based on the recent history of the ledger, and they will apply an exponential fee curve, which increases the fee based on the amount of demand.
The fee increase usually starts when transactions are slightly higher than what has been processed in the previous ledgers.
When the Ripple network indicates that it is stressed, for example, by slower rounds of consensus, the number of transactions per ledger is reduced, adjusting the fee curve accordingly to maintain the Ripple network in a stable state.
The transactions that are waiting to be processed are put into a queue, ordered by the fees that the user is willing to pay and the order in which the transactions were received, ensuring smooth Ripple transaction processing.
Schwartz stressed that this system is beneficial in that it will ensure the smooth operation of the XRPL, even during periods when the system is busy.
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