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Transaction fee mechanism design

Transaction fee mechanism design Demand for blockchains such as Bitcoin and Ethereum is far larger than supply, necessitating a mechanism that selects a subset of transactions to include "on-chain" from the pool of all pending transactions. EIP-1559 is a proposal to make several tightly coupled changes to the Ethereum blockchain's transaction fee mechanism, including the introduction of variable-size blocks and a burned base fee that rises and falls with demand. These changes are slated for deployment in Ethereum's "London fork," scheduled for late summer 2021, at which point it will be the biggest economic change made to a major blockchain to date. This short note provides an overview of recent work by the author that formally investigates and compares the incentive guarantees offered by Ethereum's current transaction fee mechanism and the new mechanism proposed in EIP-1559. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM SIGecom Exchanges Association for Computing Machinery

Transaction fee mechanism design

ACM SIGecom Exchanges , Volume 19 (1): 4 – Jul 16, 2021

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2021 Copyright is held by the owner/author(s)
ISSN
1551-9031
eISSN
1551-9031
DOI
10.1145/3476436.3476445
Publisher site
See Article on Publisher Site

Abstract

Demand for blockchains such as Bitcoin and Ethereum is far larger than supply, necessitating a mechanism that selects a subset of transactions to include "on-chain" from the pool of all pending transactions. EIP-1559 is a proposal to make several tightly coupled changes to the Ethereum blockchain's transaction fee mechanism, including the introduction of variable-size blocks and a burned base fee that rises and falls with demand. These changes are slated for deployment in Ethereum's "London fork," scheduled for late summer 2021, at which point it will be the biggest economic change made to a major blockchain to date. This short note provides an overview of recent work by the author that formally investigates and compares the incentive guarantees offered by Ethereum's current transaction fee mechanism and the new mechanism proposed in EIP-1559.

Journal

ACM SIGecom ExchangesAssociation for Computing Machinery

Published: Jul 16, 2021

Keywords: blockchain

References