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Documents authored by Heimbach, Lioba

Document
DOI: 10.4230/LIPIcs.AFT.2025.23
Transaction Fee Market Design for Parallel Execution

Authors: Bahar Acilan, Andrei Constantinescu, Lioba Heimbach, and Roger Wattenhofer

Published in: LIPIcs, Volume 354, 7th Conference on Advances in Financial Technologies (AFT 2025)

Abstract
Given the low throughput of blockchains like Bitcoin and Ethereum, scalability - the ability to process an increasing number of transactions - has become a central focus of blockchain research. One promising approach is the parallelization of transaction execution across multiple threads. However, achieving efficient parallelization requires a redesign of the incentive structure within the fee market. Currently, the fee market does not differentiate between transactions that access multiple high-demand storage keys (i.e., unique identifiers for individual data entries) versus a single low-demand one, as long as they require the same computational effort. Addressing this discrepancy is crucial for enabling more effective parallel execution. In this work, we aim to bridge the gap between the current fee market and the need for parallel execution by exploring alternative fee market designs. To this end, we propose a framework consisting of two key components: a Gas Computation Mechanism (GCM), which quantifies the load a transaction places on the network in terms of parallelization and computation, measured in units of gas, and a Transaction Fee Mechanism (TFM), which assigns a price to each unit of gas. We additionally introduce a set of desirable properties for a GCM, propose several candidate mechanisms, and evaluate them against these criteria. Our analysis highlights two strong candidates: the weighted area GCM, which integrates smoothly with existing TFMs such as EIP‑1559 and satisfies a broad subset of the outlined properties, and the time-proportional makespan GCM, which assigns gas costs based on the context of the entire block’s schedule and, through this dependence on the overall execution outcome, captures the dynamics of parallel execution more accurately.
Cite as

Bahar Acilan, Andrei Constantinescu, Lioba Heimbach, and Roger Wattenhofer. Transaction Fee Market Design for Parallel Execution. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 23:1-23:25, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)

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@InProceedings{acilan_et_al:LIPIcs.AFT.2025.23,
  author =	{Acilan, Bahar and Constantinescu, Andrei and Heimbach, Lioba and Wattenhofer, Roger},
  title =	{{Transaction Fee Market Design for Parallel Execution}},
  booktitle =	{7th Conference on Advances in Financial Technologies (AFT 2025)},
  pages =	{23:1--23:25},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-400-0},
  ISSN =	{1868-8969},
  year =	{2025},
  volume =	{354},
  editor =	{Avarikioti, Zeta and Christin, Nicolas},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.23},
  URN =		{urn:nbn:de:0030-drops-247426},
  doi =		{10.4230/LIPIcs.AFT.2025.23},
  annote =	{Keywords: blockchain, transaction fee mechanism, parallel execution}
}
Document
DOI: 10.4230/LIPIcs.AFT.2025.28
Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand

Authors: Ozan Solmaz, Lioba Heimbach, Yann Vonlanthen, and Roger Wattenhofer

Published in: LIPIcs, Volume 354, 7th Conference on Advances in Financial Technologies (AFT 2025)

Abstract
Layer 2 rollups are rapidly absorbing DeFi activity, securing over $40 billion and accounting for nearly half of Ethereum’s DEX volume by Q1 2025, yet their MEV dynamics remain understudied. We address this gap by defining and quantifying optimistic MEV, a form of speculative, on-chain MEV whose detection and execution logic reside largely on-chain in smart contracts. As a result of their speculative nature and lack of off-chain opportunity verification, optimistic MEV transactions frequently decide not to execute any trades. In this work, we focus on cyclic arbitrage, which we find is predominantly executed as optimistic MEV on Layer 2s. Using our multi-stage identification pipeline on Arbitrum, Base, and Optimism, we show that in Q1 2025, transactions from cyclic arbitrage contracts account for over 50% of on-chain gas on Base and Optimism and 7% on Arbitrum, driven mainly by "interaction" probes (on-chain computations searching for arbitrage). This speculative probing indicates that cyclic arbitrage on Layer 2s is predominantly executed as optimistic MEV and contributes to generally keeping blocks on Base and Optimism persistently full. Despite consuming over half of on-chain gas, these optimistic MEV transactions pay less than one quarter of total gas fees. Cross-network comparison reveals divergent success rates, differing patterns of code reuse, and sensitivity to varying sequencer ordering and block production times. Finally, OLS regressions link optimistic MEV trade count to ETH volatility, retail trading activity, and DEX aggregator usage. Together, these findings show that optimistic MEV has become a major source of persistent spam-like transaction activity on Layer 2s, dominating blockspace with low-value probes and reshaping the composition of on-chain activity.
Cite as

Ozan Solmaz, Lioba Heimbach, Yann Vonlanthen, and Roger Wattenhofer. Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 28:1-28:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)

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@InProceedings{solmaz_et_al:LIPIcs.AFT.2025.28,
  author =	{Solmaz, Ozan and Heimbach, Lioba and Vonlanthen, Yann and Wattenhofer, Roger},
  title =	{{Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand}},
  booktitle =	{7th Conference on Advances in Financial Technologies (AFT 2025)},
  pages =	{28:1--28:24},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-400-0},
  ISSN =	{1868-8969},
  year =	{2025},
  volume =	{354},
  editor =	{Avarikioti, Zeta and Christin, Nicolas},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.28},
  URN =		{urn:nbn:de:0030-drops-247479},
  doi =		{10.4230/LIPIcs.AFT.2025.28},
  annote =	{Keywords: blockchain, MEV, Layer 2, Ethereum}
}
Document
DOI: 10.4230/LIPIcs.AFT.2024.28
SoK: Attacks on DAOs

Authors: Rainer Feichtinger, Robin Fritsch, Lioba Heimbach, Yann Vonlanthen, and Roger Wattenhofer

Published in: LIPIcs, Volume 316, 6th Conference on Advances in Financial Technologies (AFT 2024)

Abstract
Decentralized Autonomous Organizations (DAOs) are blockchain-based organizations that facilitate decentralized governance. Today, DAOs not only hold billions of dollars in their treasury but also govern many of the most popular Decentralized Finance (DeFi) protocols. This paper systematically analyses security threats to DAOs, focusing on the types of attacks they face. We study attacks on DAOs that took place in the past, attacks that have been theorized to be possible, and potential attacks that were uncovered and prevented in audits. For each of these (potential) attacks, we describe and categorize the attack vectors utilized into four categories. This reveals that while many attacks on DAOs take advantage of the less tangible and more complex human nature involved in governance, audits tend to focus on code and protocol vulnerabilities. Thus, additionally, the paper examines empirical data on DAO vulnerabilities, outlines risk factors contributing to these attacks, and suggests mitigation strategies to safeguard against such vulnerabilities.
Cite as

Rainer Feichtinger, Robin Fritsch, Lioba Heimbach, Yann Vonlanthen, and Roger Wattenhofer. SoK: Attacks on DAOs. In 6th Conference on Advances in Financial Technologies (AFT 2024). Leibniz International Proceedings in Informatics (LIPIcs), Volume 316, pp. 28:1-28:27, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2024)

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@InProceedings{feichtinger_et_al:LIPIcs.AFT.2024.28,
  author =	{Feichtinger, Rainer and Fritsch, Robin and Heimbach, Lioba and Vonlanthen, Yann and Wattenhofer, Roger},
  title =	{{SoK: Attacks on DAOs}},
  booktitle =	{6th Conference on Advances in Financial Technologies (AFT 2024)},
  pages =	{28:1--28:27},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-345-4},
  ISSN =	{1868-8969},
  year =	{2024},
  volume =	{316},
  editor =	{B\"{o}hme, Rainer and Kiffer, Lucianna},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2024.28},
  URN =		{urn:nbn:de:0030-drops-209640},
  doi =		{10.4230/LIPIcs.AFT.2024.28},
  annote =	{Keywords: blockchain, DAO, governance, security, measurements, voting systems}
}
Document
DOI: 10.4230/LIPIcs.OPODIS.2023.8
A Fair and Resilient Decentralized Clock Network for Transaction Ordering

Authors: Andrei Constantinescu, Diana Ghinea, Lioba Heimbach, Zilin Wang, and Roger Wattenhofer

Published in: LIPIcs, Volume 286, 27th International Conference on Principles of Distributed Systems (OPODIS 2023)

Abstract
Traditional blockchain design gives miners or validators full control over transaction ordering, i.e., they can freely choose which transactions to include or exclude, as well as in which order. While not an issue initially, the emergence of decentralized finance has introduced new transaction order dependencies allowing parties in control of the ordering to make a profit by front-running others' transactions. In this work, we present the Decentralized Clock Network, a new approach for achieving fair transaction ordering. Users submit their transactions to the network’s clocks, which run an agreement protocol that provides each transaction with a timestamp of receipt which is then used to define the transactions' order. By separating agreement from ordering, our protocol is efficient and has a simpler design compared to other available solutions. Moreover, our protocol brings to the blockchain world the paradigm of asynchronous fallback, where the algorithm operates with stronger fairness guarantees during periods of synchronous use, switching to an asynchronous mode only during times of increased network delay.
Cite as

Andrei Constantinescu, Diana Ghinea, Lioba Heimbach, Zilin Wang, and Roger Wattenhofer. A Fair and Resilient Decentralized Clock Network for Transaction Ordering. In 27th International Conference on Principles of Distributed Systems (OPODIS 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 286, pp. 8:1-8:20, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2024)

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@InProceedings{constantinescu_et_al:LIPIcs.OPODIS.2023.8,
  author =	{Constantinescu, Andrei and Ghinea, Diana and Heimbach, Lioba and Wang, Zilin and Wattenhofer, Roger},
  title =	{{A Fair and Resilient Decentralized Clock Network for Transaction Ordering}},
  booktitle =	{27th International Conference on Principles of Distributed Systems (OPODIS 2023)},
  pages =	{8:1--8:20},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-308-9},
  ISSN =	{1868-8969},
  year =	{2024},
  volume =	{286},
  editor =	{Bessani, Alysson and D\'{e}fago, Xavier and Nakamura, Junya and Wada, Koichi and Yamauchi, Yukiko},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.OPODIS.2023.8},
  URN =		{urn:nbn:de:0030-drops-194989},
  doi =		{10.4230/LIPIcs.OPODIS.2023.8},
  annote =	{Keywords: Median Validity, Blockchain, Fair Ordering, Front-running Prevention, Miner Extractable Value}
}
Document
DOI: 10.4230/LIPIcs.AFT.2023.9
DeFi Lending During The Merge

Authors: Lioba Heimbach, Eric Schertenleib, and Roger Wattenhofer

Published in: LIPIcs, Volume 282, 5th Conference on Advances in Financial Technologies (AFT 2023)

Abstract
Lending protocols in decentralized finance enable the permissionless exchange of capital from lenders to borrowers without relying on a trusted third party for clearing or market-making. Interest rates are set by the supply and demand of capital according to a pre-defined function. In the lead-up to The Merge: Ethereum blockchain’s transition from proof-of-work (PoW) to proof-of-stake (PoS), a fraction of the Ethereum ecosystem announced plans of continuing with a PoW-chain. Owners of ETH - whether their ETH was borrowed or not - would hold the native tokens on each chain. This development alarmed lending protocols. They feared spiking ETH borrowing rates would lead to mass liquidations which could undermine their viability. Thus, the decentralized autonomous organization running the protocols saw no alternative to intervention - restricting users' ability to borrow. We investigate the effects of the merge and the aforementioned intervention on the two biggest lending protocols on Ethereum: AAVE and Compound. Our analysis finds that borrowing rates were extremely volatile, jumping by two orders of magnitude, and borrowing at times reached 100% of the available funds. Despite this, no spike in mass liquidations or irretrievable loans materialized. Further, we are the first to quantify and analyze hard-fork-arbitrage, profiting from holding debt in the native blockchain token during a hard fork. We find that arbitrageurs transferred tokens to centralized exchanges which at the time were worth more than 13 Mio US$, money that was effectively extracted from the platforms' lenders.
Cite as

Lioba Heimbach, Eric Schertenleib, and Roger Wattenhofer. DeFi Lending During The Merge. In 5th Conference on Advances in Financial Technologies (AFT 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 282, pp. 9:1-9:25, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2023)

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@InProceedings{heimbach_et_al:LIPIcs.AFT.2023.9,
  author =	{Heimbach, Lioba and Schertenleib, Eric and Wattenhofer, Roger},
  title =	{{DeFi Lending During The Merge}},
  booktitle =	{5th Conference on Advances in Financial Technologies (AFT 2023)},
  pages =	{9:1--9:25},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-303-4},
  ISSN =	{1868-8969},
  year =	{2023},
  volume =	{282},
  editor =	{Bonneau, Joseph and Weinberg, S. Matthew},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2023.9},
  URN =		{urn:nbn:de:0030-drops-191985},
  doi =		{10.4230/LIPIcs.AFT.2023.9},
  annote =	{Keywords: blockchain, Ethereum, lending protocol, hard fork}
}
Document
DOI: 10.4230/LIPIcs.DISC.2023.6
Base Fee Manipulation in Ethereum’s EIP-1559 Transaction Fee Mechanism

Authors: Sarah Azouvi, Guy Goren, Lioba Heimbach, and Alexander Hicks

Published in: LIPIcs, Volume 281, 37th International Symposium on Distributed Computing (DISC 2023)

Abstract
In 2021 Ethereum adjusted the transaction pricing mechanism by implementing EIP-1559, which introduces the base fee - a network fee that is burned and dynamically adjusts to the network demand. The authors of the Ethereum Improvement Proposal (EIP) noted that a miner with more than 50% of the mining power could be incentivized to deviate from the honest mining strategy. Instead, such a miner could propose a series of empty blocks to artificially lower demand and increase her future rewards. In this paper, we generalize this attack and show that under rational player behavior, deviating from the honest strategy can be profitable for a miner with less than 50% of the mining power. We show that even when miners do not collaborate, it is at times rational for smaller miners to join the attack. Finally, we propose a mitigation to address the identified vulnerability.
Cite as

Sarah Azouvi, Guy Goren, Lioba Heimbach, and Alexander Hicks. Base Fee Manipulation in Ethereum’s EIP-1559 Transaction Fee Mechanism. In 37th International Symposium on Distributed Computing (DISC 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 281, pp. 6:1-6:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2023)

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@InProceedings{azouvi_et_al:LIPIcs.DISC.2023.6,
  author =	{Azouvi, Sarah and Goren, Guy and Heimbach, Lioba and Hicks, Alexander},
  title =	{{Base Fee Manipulation in Ethereum’s EIP-1559 Transaction Fee Mechanism}},
  booktitle =	{37th International Symposium on Distributed Computing (DISC 2023)},
  pages =	{6:1--6:22},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-301-0},
  ISSN =	{1868-8969},
  year =	{2023},
  volume =	{281},
  editor =	{Oshman, Rotem},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.DISC.2023.6},
  URN =		{urn:nbn:de:0030-drops-191325},
  doi =		{10.4230/LIPIcs.DISC.2023.6},
  annote =	{Keywords: blockchain, Ethereum, transaction fee mechanism, EIP-1559}
}
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