Collusion-Resilience in Transaction Fee Mechanism Design (2402.09321v2)

Abstract: Users bid in a transaction fee mechanism (TFM) to get their transactions included and confirmed by a blockchain protocol. Roughgarden (EC'21) initiated the formal treatment of TFMs and proposed three requirements: user incentive compatibility (UIC), miner incentive compatibility (MIC), and a form of collusion-resilience called OCA-proofness. Ethereum's EIP-1559 mechanism satisfies all three properties simultaneously when there is no contention between transactions, but loses the UIC property when there are too many eligible transactions to fit in a single block. Chung and Shi (SODA'23) considered an alternative notion of collusion-resilience, called c-side-contract-proofness (c-SCP), and showed that, when there is contention between transactions, no TFM can satisfy UIC, MIC, and c-SCP for any c at least 1. OCA-proofness asserts that the users and a miner should not be able to "steal from the protocol." On the other hand, the c-SCP condition requires that a coalition of a miner and a subset of users should not be able to profit through strategic deviations (whether at the expense of the protocol or of the users outside the coalition). Our main result is the first proof that, when there is contention between transactions, no (possibly randomized) TFM in which users are expected to bid truthfully satisfies UIC, MIC, and OCA-proofness. This result resolves the main open question in Roughgarden (EC'21). We also suggest several relaxations of the basic model that allow our impossibility result to be circumvented.

• The paper establishes an impossibility theorem showing that no transaction fee mechanism can satisfy user and miner incentive compatibility alongside collusion-resilience under contention.
• It introduces a stricter notion of collusion resilience, demonstrating that achieving UIC, MIC, and c-side-contract-proofness concurrently is infeasible.
• The findings offer theoretical insights and practical guidelines to navigate limitations in current designs and guide future blockchain mechanism innovations.

Overview of Collusion-Resilience in Transaction Fee Mechanism Design

The paper under discussion, authored by Hao Chung, Tim Roughgarden, and Elaine Shi, explores the critical examination of transaction fee mechanisms (TFMs) within blockchain systems, emphasizing the resilience against collusion among participants. Specifically, it extends the foundational work initiated by Roughgarden (EC'21) by probing scenarios of transaction contention. This research is situated within the broader context of Ethereum's EIP-1559 and similar TFMs, and it systematically addresses the intricate balance between user and miner incentives while guarding against collusion.

Core Contributions

1. Impossibility Results for TFMs: The authors establish a compelling impossibility theorem, which asserts that no transaction fee mechanism can simultaneously satisfy user incentive compatibility (UIC), miner incentive compatibility (MIC), and OCA-proofness when there is transaction contention. This result is demonstrated for both deterministic and randomized TFMs, highlighting the constraints of existing systems under high transaction load.
2. Collusion Resilience Notions: The paper critiques and builds upon existing models of collusion-resilience, distinguishing between OCA-proofness and $c$-side-contract-proofness ($c$-SCP). The latter, introduced by Chung and Shi, is shown to be a stricter condition wherein no coalition of a miner and a subset of users can improve their outcomes through deviations. The authors prove that achieving UIC, MIC, and any level of $c$-SCP is infeasible in contention scenarios.
3. Theoretical and Practical Implications: By establishing these impossibilities, the paper delineates the boundaries of current TFM designs, providing both a theoretical blueprint and practical guidelines for future mechanisms. The findings implicate that EIP-1559 and similar mechanisms might not perform optimally under high transaction loads, lacking in providing the "dream" TFM properties.
4. Revelation Principle for TFMs: Extending the traditional concept in auction theory to TFMs, the paper formulates a revelation principle demonstrating that TFMs satisfying UIC, MIC, and global SCP can be transformed into equivalent direct-revelation mechanisms, with truthful bidding as a strategy.
5. Feasibility in Non-Direct Mechanisms: Despite the strong impossibility results, the authors propose potential pathways to circumvent these limitations, such as allowing coordination in bidding strategies and employing non-truthful direct-revelation mechanisms. This exploration into alternative designs invites additional discourse within the TFM design space.

Bold Claims and Speculations

The paper makes bold claims regarding the fundamental limitations of TFMs, particularly under congested network scenarios. The emphasis on the infeasibility of certain incentive-compatibility and collusion-resilience combinations calls into question some underlying assumptions of existing blockchain mechanisms, like EIP-1559.

Future Directions

While the research addresses key theoretical challenges, it suggests areas for advancement, particularly in cryptographic approaches and the application of Bayesian models to broaden the scope of feasible TFMs. The exploration of these directions could potentially lead to mechanisms that maintain desirable properties even in adversarial environments.

Conclusion

The paper offers significant insights into the construction of transaction fee mechanisms that balance user and miner incentives while mitigating collusion. The revealed impossibility results are pivotal in understanding the limitations and guiding the design of future blockchain transaction systems. As such, this research not only extends the discourse initiated by Roughgarden and others but also sets the stage for subsequent innovations in both theoretical and applied aspects of blockchain transaction processing.