How speculating on blockchain resources causes bad UX

Those designing systems for rate-limiting resource usage via billing on decentralized networks ought to seriously consider the importance of minimizing the extent to which users can speculate on and profit from reserving network resources.

The impact: user experience

Many people think that speculation is positive and even to be encouraged as a form of marketing. While true in some cases, it is worth considering the negative effects that system resource token speculation has on user experience.

Tl;dr — Allowing speculation on network resource tokens guarantees the worst-case scenario for user experience concerning the management of user resources: users will always be required to manage their own resources.

How?

To understand the connection between speculation on network resources and user experience, one must first understand the following: Organizations publishing services and smart contracts on blockchains would often choose to cover the cost of resources for their users if they could because eliminating the micro-fees for the user is worth the reduction in friction for the user by eliminating this fee source and the cognitive overhead of paying it. We know this is the case because they already do this in the traditional web space — the cost of resource consumption on a web server is covered by means other than passing along a micro-fee every time the user interacts with the application.

Therefore we have the following premise: smart contracts, like any traditional web service, ought to be able to cover the costs associated with the usage of their services on behalf of users.

If a tradable resource token exists that reserves some amount of network resources, then users can speculate on it. Any attempt by a service to automatically allocate such tokens to a user becomes a potential avenue for users to profit by gaming the service and draining its resources. Ultimately, it becomes a highly custom (read: expensive) task to design a system for a particular smart contract that offsets the cost of user resources in a way that cannot be gamed, and therefore the vast majority of smart contracts will simply accept the status quo, requiring users to manage their own resources.

Imagining a better UX

If users cannot speculate on and profit from resources, then a new possibility opens up: services could cover the cost of their usage on behalf of users. If there is no way for a user to profit off of the “free resources” then there is a significantly reduced incentive for a user to game this aspect of the service.

Furthermore, services and smart contracts could potentially cover the cost of account creation on behalf of users pre-funded with some amount of resources. This is of particular interest for networks that use an account structure wherein there is some cost associated with each account (as opposed to public-key addressable “accounts” such as in Bitcoin).

Conclusion

This post is intended to clarify the connection between the elimination of user speculation on network resource tokens and the resulting potential for improving user experience concerning resource management.