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In reference to Min-Ada-Value

Imagine the following scenario:

  • Alonzo's long anticipated smart contracts finally arrive to the main net
  • The ERC20 converter is a massive success and ports hundreds of ERC20 tokens over to Cardano
  • There are a lot of "WhateverSwap" (e.g. SundaeSwap, YaySwap, Minswap, ...) platforms each running a massive amount of swaps
  • There are a lot of new smart contracts now being used for the former ERC20 tokens
  • People are sending ADA, native tokens and former ERC20 tokens around like crazy
  • In Ethiopia, after Cardano + Atala PRISM turned out to be a huge success for the students, the government decided to replace its currency by using Cardano, now every person is paying stuff in ADA
  • In Tansania, after seing the success in Ethiopia, the government decided to start a pilot project with also thousands of people using Cardano
  • <your imagination here>...

All this would result in the price of ADA going up, up and up. Now imagine the price of ADA sitting at $14 (conservative estimate). For every transaction, some portion of ADA (currently 1) needs to be sent with it. $14 may still be affordable for most people in the developed countries, but might be a small fortune for some unbanked. So these people would probably become cut off from using Cardano. And even for the developed countries it is not sure if everyone would be happy to pay these fees.

=> My question is: Could Min-Ada ever become a bottleneck for Cardano the same way the present gas fee congestion is a bottleneck for Ethereum?

I know that Min-Ada can and probably will be dynamically adjusted according to the corresponding situation. However, how well thought out is this solution? Could someone explain the mechanics on how this would work?

4

No, it would not be a bottleneck if Cardano implements babel fees that will enable you to pay (actually arbitrage) your fees in different tokens.

That being said, to keep a decentralized network secure, you always offer something of value for the work of validation blocks. Also, the author of the transaction might not be necessarily be the same party that pays for it.

In the future, most of the transaction will be probably one layer above (for example Hydra) and the final fee will be paid only for a settlement.

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