Game-Theoretic Analysis of an Exclusively Transaction-Fee Reward Blockchain System

Kruminis, Edvinas and Navaie, Keivan (2022) Game-Theoretic Analysis of an Exclusively Transaction-Fee Reward Blockchain System. IEEE Access, 10. pp. 5002-5011. ISSN 2169-3536

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Abstract

Miners in a blockchain system are typically rewarded in two ways - through a fixed block reward, and by the transaction fees that are voluntarily offered by its users. As the available space inside a block is limited, users must compete against each other by submitting higher fees to obtain this limited resource. In this paper, we model blockchain transaction inclusion as a time-sensitive dynamic game, where users base their fees depending on both what their competitors in the network are offering, and by their own urgency of having their transactions approved. We then investigate the effect that mempool congestion (the aggregate size of transactions waiting to be confirmed) and different block sizes have on the fees users would be willing to pay. Our analysis concludes that miners have no rational reason to artificially limit the block size, which is in direct contrast with previous research findings. Instead, we find that increasing the block size in relation to a growing mempool both lowers the individual fees that users have to pay, and increases the total in fees collected, which raises not only the utility of the miners, but also of the regular users of the blockchain system.

Item Type:
Journal Article
Journal or Publication Title:
IEEE Access
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2500
Subjects:
ID Code:
163890
Deposited By:
Deposited On:
05 Jan 2022 14:30
Refereed?:
Yes
Published?:
Published
Last Modified:
22 Nov 2022 10:57