2026-07-23T01:41:57Z https://drops.dagstuhl.de/oai

oai:drops-oai.dagstuhl.de:12408 2024-03-06T10:50:03Z ddc:004 open_access

An Incentive Analysis of Some Bitcoin Fee Designs (Invited Talk) Yao, Andrew Chi chih Bitcoin blockchain incentive compatibility maximum revenue mechanism design In the Bitcoin system, miners are incentivized to join the system and validate transactions through fees paid by the users. A simple "pay your bid" auction has been employed to determine the transaction fees. Recently, Lavi, Sattath and Zohar [Lavi et al., 2019] proposed an alternative fee design, called the monopolistic price (MP) mechanism, aimed at improving the revenue for the miners. Although MP is not strictly incentive compatible (IC), they studied how close to IC the mechanism is for iid distributions, and conjectured that it is nearly IC asymptotically based on extensive simulations and some analysis. In this paper, we prove that the MP mechanism is nearly incentive compatible for any iid distribution as the number of users grows large. This holds true with respect to other attacks such as splitting bids. We also prove a conjecture in [Lavi et al., 2019] that MP dominates the RSOP auction in revenue (originally defined in [Goldberg et al., 2006] for digital goods). These results lend support to MP as a Bitcoin fee design candidate. Additionally, we explore some possible intrinsic correlations between incentive compatibility and revenue in general. Schloss Dagstuhl – Leibniz-Zentrum für Informatik Andrew Chi chih Yao 2020 Is Part Of LIPIcs, Volume 168, 47th International Colloquium on Automata, Languages, and Programming (ICALP 2020) InProceedings Text doc-type:ResearchArticle publishedVersion application/pdf doi:10.4230/LIPIcs.ICALP.2020.1 urn:nbn:de:0030-drops-124087 https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ICALP.2020.1 eng https://creativecommons.org/licenses/by/3.0/legalcode