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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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Base Fee Manipulation in Ethereum’s EIP-1559 Transaction Fee Mechanism

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