Transaction-Fee Derivatives for Cryptocurrency Cost Predictability

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Solution Overview

Problem

The variability and unpredictability of transaction fees in cryptocurrencies, particularly Bitcoin, pose risks for businesses and miners due to uncertainty in future transaction costs, making it difficult to plan and manage financial operations effectively.

Innovation Solution

Derivative contracts are developed to mitigate these risks by settling based on transaction fees, using a clearing computer system to calculate and determine a settlement value based on transaction differences and conversion factors, allowing entities to lock in projected fee rates and minimize financial uncertainties.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Productivity

If transaction fees are allowed to vary based on network utilization, then network efficiency and miner incentives are improved, but financial predictability and planning stability deteriorate

Engineering Contradiction:

Improvenetwork efficiencyVSAvoidfinancial predictability

Core Design Contradiction:

ProductivityVSReliability

Solution Approach 1:

The patent applies preliminary action by allowing market participants to enter into derivative contracts in advance that lock in future transaction fee rates. This enables businesses and miners to pre-determine their financial obligations and revenues, achieving financial predictability while the underlying network continues to use variable fees for efficiency.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent introduces derivative contracts as an intermediary financial instrument that mediates between the variable fee mechanism and the need for financial stability. These contracts act as a buffer, allowing participants to hedge against fee volatility without changing the core fee structure, thus resolving the contradiction between efficiency and predictability.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Strength

If transaction fees are set to incentivize miners during high utilization, then network security and processing capacity are improved, but cost uncertainty and financial risk increase

Engineering Contradiction:

Improvenetwork securityVSAvoidcost uncertainty

Core Design Contradiction:

StrengthVSObject-affected harmful factors

Solution Approach 1:

The patent converts the harmful effect of fee volatility into a beneficial trading opportunity. By creating derivative contracts based on transaction fee indices, the uncertainty and risk that miners and businesses face are transformed into liquid financial instruments that can be bought, sold, and hedged, turning a problem into a market opportunity.

Inventive Principle:

Principle #22Blessing in disguise (Convert harm into benefit)

Solution Approach 2:

The patent changes the parameter of fee structure from fixed to variable, and simultaneously introduces derivative contracts with various strike prices and maturities. This allows participants to select the appropriate level of fee protection based on their risk tolerance, effectively managing cost uncertainty while maintaining network security incentives.

Inventive Principle:

Principle #35Parameter changes

Data Source

PatentUS20250292327A1Derivative contracts that settle based on transaction data

Publication Date: 2025.09.18 CHICAGO MERCANTILE EXCHANGE INC

AI summary

The disclosed systems and methods make derivatives contracts based on an underlying virtual currency available for trading. Certain derivatives contracts have a settlement value based on the transaction fees associated with recording and/or performing transactions for the selected virtual currency. The contracts can be used, for example, by virtual currency miners against certain risks associated with mining virtual currency.