Transaction Fee Mechanism Design for Leaderless Blockchain Protocols

2025-05-23

AI Summary

This paper addresses transaction fee mechanism design for leaderless blockchains with multiple collaborative block producers. We introduce the novel property of *strongly block-producer incentive compatibility* (strongly BPIC) and propose the first *first-price auction with equal sharing* (FPA-EQ) mechanism. FPA-EQ achieves a Pareto-optimal Nash equilibrium under multi-agent strategic interaction, strictly satisfies strongly BPIC, and guarantees that the equilibrium expected social welfare is at least 63.2% of the optimal welfare. We prove that, under the strongly BPIC constraint, dominant-strategy incentive compatibility (DSIC) and welfare optimality are fundamentally incompatible—thereby characterizing the precise trade-off between incentive compatibility and efficiency. To our knowledge, this work provides the first transaction fee mechanism for multi-proposer consensus protocols that simultaneously satisfies rigorous theoretical guarantees and practical feasibility.

Technology Category

• Multiagent Systems: Mechanism Design
• Game Theory and Economic Paradigms: Mechanism Design
• Search and Optimization: Learning to Search

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Security and Privacy: Blockchains and distributed ledgers
• Responsible Web: Data and user privacy-enhancing technologies for the Web

Abstract

We initiate the study of transaction fee mechanism design for blockchain protocols in which multiple block producers contribute to the production of each block. Our contributions include: - We propose an extensive-form (multi-stage) game model to reason about the game theory of multi-proposer transaction fee mechanisms. - We define the strongly BPIC property to capture the idea that all block producers should be motivated to behave as intended: for every user bid profile, following the intended allocation rule is a Nash equilibrium for block producers that Pareto dominates all other Nash equilibria. - We propose the first-price auction with equal sharing (FPA-EQ) mechanism as an attractive solution to the multi-proposer transaction fee mechanism design problem. We prove that the mechanism is strongly BPIC and guarantees at least a 63.2% fraction of the maximum-possible expected welfare at equilibrium. - We prove that the compromises made by the FPA-EQ mechanism are qualitatively necessary: no strongly BPIC mechanism with non-trivial welfare guarantees can be DSIC, and no strongly BPIC mechanism can guarantee optimal welfare at equilibrium.

Problem

• Designing transaction fee mechanisms for leaderless blockchains
• Ensuring Nash equilibrium for multi-proposer block production
• Balancing welfare guarantees with incentive compatibility

Innovation

• Multi-stage game model for multi-proposer mechanisms
• Strongly BPIC property for Nash equilibrium
• First-price auction with equal sharing (FPA-EQ)