Please describe your proposed solution

We propose to implement an alternative version of transaction ordering in the Cardano node mempool, based on transaction fees and execution budgets.

Key points of the proposal:

1. Flexible Configuration: SPOs will be able to switch between the current First-In-First-Out (FIFO) and the new Generous-In-First-Out (GIFO) ranking mempool.
2. Mempool Behavior:

• The mempool will collect and hold N*Blocksize of transactions needed for a block.
• A portion of these transactions will be ordered by fees, with lower execution budgets used as a tiebreaker for equal fees.

1. Fairness Parameter:

• A configurable "Fairness" parameter will determine the balance between fee-ordered and FIFO transactions.
• 100% fairness means pure FIFO ordering (current system).
• 0% fairness means full fee-based ordering.
• SPOs can adjust this parameter to find an optimal balance.

1. Benefits:

• Improved throughput for high-priority (high-fee) transactions.
• Deprioritization of transactions with overly high execution budgets.
• More optimal block filling.

1. Implementation:

• This mempool transaction ordering functionality is not part of Cardano consensus.
• No hardfork will be required for implementation.

This solution aims to create a more dynamic and efficient transaction processing system while allowing SPOs to maintain a desired level of fairness in transaction ordering.

Please define the positive impact your project will have on the wider Cardano community

This will have a huge impact!

Cardano will get a fee market!

SPOs will get higher rewards on average.

DEXes and DApps will get higher throughput for the important transactions.

Users will get an option to prioritize their transactions.

Cardano will be more resilient to DDoS attacks similar to the one that happened in June 2024.

What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

The main proposer, Alexander Nemish will be actively working on the proposal.

Alexander Nemish is a former compiler engineer at IOG, who worked on Marlowe DSL (https://marlowe.iohk.io).

Alexander Nemish the author of Scalus - DApps Development Platform for Cardano.

I have investigated Cardano node source code and I believe I know how to implement the fee market solution.

What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: CIP draft and solution discussion with IOG and community members.

Milestone 2: Prototype implementation of the fee/execution budget ranking in mempool.

Milestone 3: Testing the solution

Milestone 4: Add configuration options for enabling/disabling the feature and fine-tuning the params.

Milestone 5: Testing in Preview. Review and merge the code to Cardano node codebase.

Final Milestone: Add documentation and examples.

Produce final report.

Who is in the project team and what are their roles?

The main proposer, Alexander Nemish will be actively working on the proposal.

Alexander Nemish is a former compiler engineer at IOG, who worked on Marlowe DSL (https://marlowe.iohk.io).

Alexander Nemish the author of Scalus - DApps Development Platform for Cardano.

Please provide a cost breakdown of the proposed work and resources

I estimated this as 4 man-month of work

4*20*750/0.3 = 200,000

No dependencies.

How does the cost of the project represent value for money for the Cardano ecosystem?

The 200,000 ADA cost represents excellent value for the Cardano ecosystem for these reasons:

1. Enhanced Network Performance: Optimizing transaction ordering will significantly improve throughput for high-priority transactions, benefiting the entire ecosystem.
2. Increased Security: The solution will make Cardano more resilient to DDoS attacks, protecting against costly disruptions.
3. Competitive Advantage: Implementing a fee market keeps Cardano competitive with other leading blockchain platforms.
4. Economic Benefits: SPOs will likely see higher rewards, while improved DApp and DEX performance could drive more economic activity.
5. User Empowerment: Allowing transaction prioritization provides users with more control, potentially increasing adoption.
6. Long-term Impact: This foundational improvement will provide value far beyond the initial investment.
7. Expertise Efficiency: The proposer's background ensures efficient, high-quality implementation.

Given the far-reaching impact on Cardano's performance, security, and growth, this funding represents a strategic investment likely to yield returns many times over.