Document Open Access Logo

Characterizing Off-Chain Influence Proof Transaction Fee Mechanisms

Authors Aadityan Ganesh , Clayton Thomas , S. Matthew Weinberg

PDF

File

Thumbnail PDF
PDF
LIPIcs.ITCS.2026.65.pdf
  • Filesize: 0.82 MB
  • 23 pages

Document Identifiers

Related Versions

Subject Classification

ACM Subject Classification
  • Theory of computation → Algorithmic mechanism design
  • Applied computing → Online auctions
Keywords
  • Transaction Fee Mechanism Design
  • Off-Chain Influence Proofness
  • Blockchain
  • Decentralized Finance
  • Simple Auctions

Metrics

Abstract

Roughgarden [Roughgarden, 2020] initiates the study of Transaction Fee Mechanisms (TFMs), and posits that the on-chain game of a "good" TFM should be on-chain simple (OnC-S), i.e., incentive compatible for both the users and the miner. Recent work of Ganesh, Thomas an Weinberg [Ganesh et al., 2024] posit that they should additionally be Off-Chain Influence-Proof (OffC-IP), which means that the miner cannot achieve any additional revenue by separately conducting an off-chain auction to determine on-chain inclusion. They observe that a cryptographic second-price auction satisfies both properties, but leave open the question of whether other mechanisms (such as those not dependent on cryptography) satisfy these properties.
In this paper, we characterize OffC-IP TFMs: They are those satisfying a burn identity relating the burn rule to the allocation rule. In particular, we show that auction is OffC-IP if and only if its (induced direct-revelation) allocation rule X̄(⋅) and burn rule B̅(⋅) (both of which take as input users' values v₁, … , v_n) are truthful when viewing (X̄(⋅), B̅(⋅)) as the allocation and pricing rule of a multi-item auction for a single additive buyer with values (φ(v₁),…, φ(v_n)) equal to the users' virtual values. 
Building on this burn identity, we characterize OffC-IP and OnC-S TFMs that are deterministic and do not use cryptography: They are posted-price mechanisms with specially-tuned burns. As a corollary, we show that such TFMs can only exist with infinite supply and prior-dependence. However, we show that for randomized TFMs, there are additional OnC-S and OffC-IP auctions that do not use cryptography (even when there is {finite} supply, under prior-dependence with a bounded prior distribution). Holistically, our results show that while OffC-IP is a fairly stringent requirement, families of OffC-IP mechanisms can be found for a variety of settings.

Cite As Get BibTex

Aadityan Ganesh, Clayton Thomas, and S. Matthew Weinberg. Characterizing Off-Chain Influence Proof Transaction Fee Mechanisms. In 17th Innovations in Theoretical Computer Science Conference (ITCS 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 362, pp. 65:1-65:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026) https://doi.org/10.4230/LIPIcs.ITCS.2026.65

Author Details

Aadityan Ganesh
  • Princeton University, NJ, USA
Clayton Thomas
  • Yale University, New Haven, CT, USA
S. Matthew Weinberg
  • Princeton University, NJ, USA

Funding

  • Ganesh, Aadityan: Supported by an Ethereum Foundation Academic Grant.
  • Weinberg, S. Matthew: Supported by an Ethereum Foundation Academic Grant and NSF CAREER Award CCF-1942497.

References

  1. Guillermo Angeris, Theo Diamandis, and Ciamac Moallemi. Multidimensional blockchain fees are (essentially) optimal. arXiv preprint arXiv:2402.08661, 2024. URL: https://doi.org/10.48550/arXiv.2402.08661.
  2. Gilad Asharov, Ran Canetti, and Carmit Hazay. Towards a game theoretic view of secure computation. In Eurocrypt, pages 426-445, 2011. URL: https://doi.org/10.1007/978-3-642-20465-4_24.
  3. Moshe Babaioff, Shahar Dobzinski, Sigal Oren, and Aviv Zohar. On bitcoin and red balloons. In Proceedings of the 13th ACM conference on electronic commerce, pages 56-73, 2012. URL: https://doi.org/10.1145/2229012.2229022.
  4. Moshe Babaioff and Noam Nisan. On the optimality of eip-1559 for patient bidders (draft-comments welcome), 2024. Google Scholar
  5. Maryam Bahrani, Pranav Garimidi, and Tim Roughgarden. Transaction fee mechanism design in a post-mev world. Cryptology ePrint Archive, 2024. Google Scholar
  6. Soumya Basu, David Easley, Maureen O'Hara, and Emin Gün Sirer. Towards a functional fee market for cryptocurrencies. CoRR, abs/1901.06830, 2019. URL: https://arxiv.org/abs/1901.06830.
  7. Xi Chen, David Simchi-Levi, Zishuo Zhao, and Yuan Zhou. Bayesian mechanism design for blockchain transaction fee allocation. arXiv preprint arXiv:2209.13099, 2024. Google Scholar
  8. Tarun Chitra, Matheus V. X. Ferreira, and Kshitij Kulkarni. Credible, optimal auctions via blockchains. Cryptology ePrint Archive, Paper 2023/114, 2023. URL: https://eprint.iacr.org/2023/114.
  9. Hao Chung, Tim Roughgarden, and Elaine Shi. Collusion-resilience in transaction fee mechanism design. EC 2024, 2024. arXiv preprint arXiv:2402.09321. URL: https://doi.org/10.48550/arXiv.2402.09321.
  10. Hao Chung and Elaine Shi. Foundations of transaction fee mechanism design. In Proceedings of the 2023 Annual ACM-SIAM Symposium on Discrete Algorithms (SODA), pages 3856-3899, 2023. URL: https://doi.org/10.1137/1.9781611977554.CH150.
  11. Hao Chung, Ke Wu, and Elaine Shi. Foundations of platform-assisted auctions. arXiv preprint arXiv:2501.03141, 2025. Google Scholar
  12. Kimon Drakopoulos, Irene Lo, and Justin Mulvany. Blockchain mediated persuasion. In Proceedings of the 24th ACM Conference on Economics and Computation, EC '23, 2023. Google Scholar
  13. Meryem Essaidi, Matheus VX Ferreira, and S Matthew Weinberg. Credible, strategyproof, optimal, and bounded expected-round single-item auctions for all distributions. arXiv preprint arXiv:2205.14758, 2022. Google Scholar
  14. Ittay Eyal and Emin Gün Sirer. Majority is not enough: Bitcoin mining is vulnerable. In Financial Cryptography and Data Security, pages 436-454. Springer, 2014. URL: https://doi.org/10.1007/978-3-662-45472-5_28.
  15. Matheus VX Ferreira, Yotam Gafni, and Max Resnick. Incentive-compatible collusion-resistance via posted prices. arXiv preprint arXiv:2412.20853, 2024. Google Scholar
  16. Matheus VX Ferreira, Daniel J Moroz, David C Parkes, and Mitchell Stern. Dynamic posted-price mechanisms for the blockchain transaction-fee market. In Proceedings of the 3rd ACM Conference on Advances in Financial Technologies, pages 86-99, 2021. Google Scholar
  17. Matheus VX Ferreira and S Matthew Weinberg. Credible, truthful, and two-round (optimal) auctions via cryptographic commitments. In Proceedings of the 21st ACM Conference on Economics and Computation, pages 683-712, 2020. Google Scholar
  18. Yotam Gafni and Aviv Yaish. Greedy transaction fee mechanisms for (non-) myopic miners. arXiv preprint arXiv:2210.07793, 2022. URL: https://doi.org/10.48550/arXiv.2210.07793.
  19. Yotam Gafni and Aviv Yaish. Barriers to collusion-resistant transaction fee mechanisms. EC 2024, 2024. arXiv preprint arXiv:2402.08564. URL: https://doi.org/10.48550/arXiv.2402.08564.
  20. Yotam Gafni and Aviv Yaish. Discrete and bayesian transaction fee mechanisms. In The International Conference on Mathematical Research for Blockchain Economy, pages 145-171. Springer, 2024. URL: https://doi.org/10.1007/978-3-031-68974-1_8.
  21. Aadityan Ganesh, Clayton Thomas, and S Matthew Weinberg. Revisiting the primitives of transaction fee mechanism design. In Proceedings of the 25th ACM Conference on Economics and Computation, pages 703-703, 2024. Google Scholar
  22. Aadityan Ganesh and Qianfan Zhang. Truthful, credible, and optimal auctions for matroids via blockchains and commitments. In Proceedings of the 26th ACM Conference on Economics and Computation, pages 923-943, 2025. URL: https://doi.org/10.1145/3736252.3742652.
  23. Juan Garay, Jonathan Katz, Ueli Maurer, Björn Tackmann, and Vassilis Zikas. Rational protocol design: Cryptography against incentive-driven adversaries. In FOCS, pages 648-657, 2013. URL: https://doi.org/10.1109/FOCS.2013.75.
  24. Tiantian Gong, Aniket Kate, Hemanta K. Maji, and Hai H. Nguyen. Disincentivize collusion in verifiable secret sharing. Cryptology ePrint Archive, Paper 2025/446, 2025. URL: https://eprint.iacr.org/2025/446.
  25. Adam Groce, Jonathan Katz, Aishwarya Thiruvengadam, and Vassilis Zikas. Byzantine agreement with a rational adversary. In ICALP, pages 561-572, 2012. URL: https://doi.org/10.1007/978-3-642-31585-5_50.
  26. Joseph Halpern and Vanessa Teague. Rational secret sharing and multiparty computation: extended abstract. In STOC, pages 623-632, 2004. URL: https://doi.org/10.1145/1007352.1007447.
  27. Mahimna Kelkar, Aadityan Ganesh, Aditi Partap, Joseph Bonneau, and S Matthew Weinberg. Breaking omertà: On threshold cryptography, smart collusion, and whistleblowing. In Proceedings of the 2025 ACM SIGSAC Conference on Computer and Communications Security, pages 3505-3519, 2025. URL: https://doi.org/10.1145/3719027.3765087.
  28. Ron Lavi, Or Sattath, and Aviv Zohar. Redesigning bitcoin’s fee market. In The World Wide Web Conference, WWW 2019, San Francisco, CA, USA, May 13-17, 2019, pages 2950-2956, 2019. URL: https://doi.org/10.1145/3308558.3313454.
  29. Roger B. Myerson. Optimal Auction Design. Mathematics of Operations Research, 6(1):58-73, 1981. URL: https://doi.org/10.1287/MOOR.6.1.58.
  30. Jean-Charles Rochet. The taxation principle and multi-time hamilton-jacobi equations. Journal of Mathematical Economics, 14(2):113-128, 1985. Google Scholar
  31. Tim Roughgarden. Transaction fee mechanism design for the ethereum blockchain: An economic analysis of eip-1559. arXiv preprint arXiv:2012.00854, 2020. URL: https://arxiv.org/abs/2012.00854.
  32. Tim Roughgarden. Transaction fee mechanism design. ACM SIGecom Exchanges, 19(1):52-55, 2021. Full version at URL: https://arxiv.org/abs/2106.01340.
  33. Elaine Shi, Hao Chung, and Ke Wu. What can cryptography do for decentralized mechanism design. Innovations in Theoretical Computer Science (ITCS), 2023. Google Scholar
  34. Ke Wu, Elaine Shi, and Hao Chung. Maximizing miner revenue in transaction fee mechanism design. ITCS, 2024. Google Scholar
  35. Andrew Chi-Chih Yao. An incentive analysis of some bitcoin fee designs. CoRR, abs/1811.02351, 2018. URL: https://arxiv.org/abs/1811.02351.
Any Issues?
X

Feedback on the Current Page

CAPTCHA

Thanks for your feedback!

Feedback submitted to Dagstuhl Publishing

Could not send message

Please try again later or send an E-mail
© 2023-2025 Schloss Dagstuhl – LZI GmbH About DROPS Imprint Privacy Contact