The post Alkimiya Launches Protocol To Tackle Transaction Fees Volatility appeared on BitcoinEthereumNews.com.

Alkimiya’s new protocol allows for the trading of Bitcoin transaction fees to manage volatility. The protocol was developed by Anicca Research and is backed by major investors like Castle Island Ventures. Alkimiya, a blockspace markets protocol, has introduced a new tool that enables users to trade Bitcoin transaction fees directly. This move comes as Bitcoin transaction fees continue to exhibit high volatility, with fees known to fluctuate between 20 to 500 times their value within a single week. Leo Zhang, founder of Alkimiya Protocol, explained the rationale behind the tool: “Through extensive research on the structural impact of various transactions on network fee rates, we concluded that trading transaction fees offers far more accurate exposure to the ecosystem’s fundamentals compared to trading Layer 1 tokens.” Recent events in the Bitcoin ecosystem have highlighted fee volatility issues. In mid-April, following the Bitcoin Halving, a surge in Ordinals and Runes projects caused network fees to rise from $4.8 to $125 per transaction.  In May, increased activity around the $DOG token saw fees increase from $2 to $7 per transaction. The protocol potentially offers various uses for different participants in the crypto space. Collectors could use it to manage mint costs, while traders might use it to position themselves for anticipated network activity. Service providers, who have been vulnerable to sudden fee spikes, could use it as a hedging tool. A recent incident underscores the potential relevance of such a tool. In June, a bug in OKX’s UTXO consolidation script resulted in fees increasing from $5.8 to $87.8 per transaction in a single day, leading to reported losses of approximately $18 million for the exchange. Nic Carter, partner at Castle Island Ventures, an investor in Alkimiya, commented: “Fee volatility is a lingering UX challenge for blockchain users, particularly on Bitcoin. As Bitcoin enters…

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Filed under: News - @ July 25, 2024 11:16 am