Benefits of Ardor 0 Fee Transactions

Businesses can sponsor transaction fees for their users

In my previous article about the token duality problem, I explained why the model of single blockchain/single token does not work well for real-life applications.

To emphasize this, let’s look at a simple example. Shortly after we released the Nxt Monetary System back in 2015, we were approached by an entrepreneur who wanted to use the blockchain to sell concert tickets.

The use case was clear, scale wasn’t a big issue and building a wallet based on the Nxt APIs looked straightforward. The idea was that for each concert, the organizer would issue a token, where each unit represents an entry ticket. Customers would buy this ticket for Nxt and check into the concert by sending the token back to the organizer. The choice whether or not users will be able to transfer and trade the ticket tokens between themselves was left to the organizer since both options allowing or preventing this were supported.

As soon as we started to look deeper into the design, we ran into a problem. For users to spend or transfer the ticket token they purchased, they had to pay transaction fees denominated in NXT. This meant that the organizer had to send together with the ticket token at least 1 NXT to pay the transaction fee. Transfer of a token and transfer of NXT are considered two different transactions therefore the organizer had to pay 3 NXT for every ticket sold (One NXT to fund the buyer account so that he can pay his transaction fee, and two in direct transaction fees for token transfer and NXT transfer transactions). Later, the buyer is still limited to a single transaction. Clearly we realized that this was a clumsy design, and it was quickly abandoned.

Amazingly, this exact clumsy design is being used today by most Ethereum ERC20 issuers who fund their user accounts with ETH in order to allow them to pay Gas on their token transactions.

Fast forward to Ardor which implements an elegant solution to this problem. When using a currency or asset issued on a child chain, i.e. the concert ticket token in the above example, the seller can issue a ticket token (asset or currency) on a child chain (Ignis) and send the ticket token to the buyer without funding their account with Ignis. When the buyer spends the token he will submit a 0 fee transaction. The concert organizer runs a custom bundler which only bundles transactions specific to their concert tickets for free to include this child chain transaction into the blockchain. In other words the concert organizer can sponsor the transaction fees for the ticket buyers so they don’t have to know anything about blockchain.

Using this design, ticket buyers only need to deal with the ticket token itself and not with the child chain or parent chain tokens, in fact, they don’t even need to know they are using a blockchain based system. The organizer just needs to purchase enough Ardor in advance to cover the transaction fees to be paid by the free bundler and this way hedge against fluctuations in the Ardor price. The initial cost of this Ardor can be factored into the ticket price. Using this design prices can be even denominated in Euro, using the AEUR chain.

The unique parent/child architecture of Ardor allows businesses to sponsor their users’ transaction fees. This unique and powerful feature of Ardor opens the door for many real-life blockchain based applications which were impractical to develop until now.