Quote from: coinft on July 26, 2014, 06:18:58 PM

A miner who wants to mine a block larger than 1MB needs to give up a part of the block reward. That way there is a strong incentive not to break the 1MB limit unless there are enough TX available which make up for the lost part (and the higher orphan risk) in fees.

This is the approach we were talking about with Bytecoin above. The income is reduced by a multiple determined as function of size^2. This, sadly, does not work in the long run once subsidy is not an overwhelming portion of miner income, because transactions will just pay miners directly (e.g. just author N different transactions, one for each miner you know of, each including an output for that miner. Eligius started supporting being paid fees in this way in 2011).

A version that wasn't a multiple but instead was an absolute number of coins to destroy might work, since you couldn't escape it by moving fees to outputs but then you have a free parameter of not knowing the value of a bitcoin to its users and as we've seen with fees, constants that depend on how much a bitcoin is worth easily get out of wack. Any magical thoughts there?