3. I intuitively expect some flaw around the variable control over fees collected per unit of PoW expended, i.e. control over difficulty. But I am too sleepy to work through this part of the paper right now.
...
Afaics, difficulty adjustments and a DAG seem fundamentally incompatible. Afair Iota doesn't need to adjust difficulty because the proof-of-work isn't rewarded.
A more concise reason why
minting and DAGs appear to be fundamentally incompatible is because:
- As the white paper admits in section 2.2.1, there is no total order perspective for which to compute the systemic difficulty, thus it can only be computed per DAG branch.
- Minting reward (per unit of proof-of-work computation) is maximized by mining on the branch with the least cumulative proof-of-work, so there is an incentive to maximize the breadth of the tree which is a Nash equilibrium conflict with the fee mechanism and Theorem 2's assumption of an incentive to apply proof-of-work (i.e. append) on the "leading edge", i.e. the "altruistic-prime"¹ of the fee mechanism is an undersupplied public good relative to the individualized reward of minting.
¹ Given that systemically there is no income from fees because taking fees (instead of "pass-through") lowers the value for others to append to the branch. Thus the fees are effectively burned.