Nothing Special   »   [go: up one dir, main page]
Document Open Access Logo

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

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

PDF
Thumbnail PDF

File

LIPIcs.DISC.2023.6.pdf
  • Filesize: 0.91 MB
  • 22 pages

Document Identifiers

Author Details

Sarah Azouvi
  • Unaffiliated, Edinburgh, UK
Guy Goren
  • Protocol Labs, Haifa, Israel
Lioba Heimbach
  • ETH Zurich, Switzerland
Alexander Hicks
  • University College London, UK

Acknowledgements

We thank Andrei Constantinescu for the helpful ideas and discussions.

Cite As Get BibTex

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) https://doi.org/10.4230/LIPIcs.DISC.2023.6

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.

Subject Classification

ACM Subject Classification
  • Theory of computation → Algorithmic game theory and mechanism design
  • Applied computing → Economics
Keywords
  • blockchain
  • Ethereum
  • transaction fee mechanism
  • EIP-1559

Metrics

  • Access Statistics
  • Total Accesses (updated on a weekly basis)
    0
    PDF Downloads
    0
    Metadata Views

Supplementary Materials

References

  1. Tim Beiko. EIP-1559 Community Outreach Report. https://medium.com/ethereum-cat-herders/eip-1559-community-outreach-report-aa18be0666b5, 2020. Accessed: 2023-01-25.
  2. Vitalik Buterin. EIP 1559 FAQ. https://notes.ethereum.org/@vbuterin/eip-1559-faq#Won%E2%80%99t-miners-have-the-incentive-to-collude-to-push-down-the-BASEFEE-by-making-all-their-blocks-less-than-half-full, 2021. Accessed: 2023-01-26.
  3. Vitalik Buterin, Eric Conner, Rick Dudley, Matthew Slipper, Ian Norden, and Abdelhamid Bakhta. Fee market change for ETH 1.0 chain. https://github.com/ethereum/EIPs/blob/master/EIPS/eip-1559.md, 2019. Accessed: 2020-09-28.
  4. CoinMarketCap. Today’s Cryptocurrency Prices by Market Cap. https://coinmarketcap.com/, 2017. Accessed: 2023-07-21.
  5. Philip Daian, Steven Goldfeder, Tyler Kell, Yunqi Li, Xueyuan Zhao, Iddo Bentov, Lorenz Breidenbach, and Ari Juels. Flash boys 2.0: Frontrunning in decentralized exchanges, miner extractable value, and consensus instability. In 2020 IEEE Symposium on Security and Privacy (SP), pages 910-927. IEEE, 2020. Google Scholar
  6. Ethereum. Phase 0 - Honest Validator. https://github.com/ethereum/consensus-specs/blob/dev/specs/phase0/validator.md#lookahead, 2022. Accessed: 2023-01-27.
  7. 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
  8. Adem Efe Gencer, Soumya Basu, Ittay Eyal, Robbert Van Renesse, and Emin Gün Sirer. Decentralization in bitcoin and ethereum networks. In Financial Cryptography and Data Security: 22nd International Conference, FC 2018, Nieuwpoort, Curaçao, February 26-March 2, 2018, Revised Selected Papers 22, pages 439-457. Springer, 2018. Google Scholar
  9. Dominic Grandjean, Lioba Heimbach, and Roger Wattenhofer. Ethereum proof-of-stake consensus layer: Participation and decentralization. arXiv preprint arXiv:2306.10777, 2023. Google Scholar
  10. Lioba Heimbach and Roger Wattenhofer. Sok: Preventing transaction reordering manipulations in decentralized finance. In 4th ACM Conference on Advances in Financial Technologies (AFT), Cambridge, Massachusetts, USA, September 2022. Google Scholar
  11. Jens Leth Hougaard and Mohsen Pourpouneh. Farsighted miners under transaction fee mechanism eip1559. Technical report, IFRO Working Paper, 2022. Google Scholar
  12. Gur Huberman, Jacob D Leshno, and Ciamac Moallemi. Monopoly without a monopolist: An economic analysis of the bitcoin payment system. The Review of Economic Studies, 88(6):3011-3040, 2021. Google Scholar
  13. Ron Lavi, Or Sattath, and Aviv Zohar. Redesigning bitcoin’s fee market. ACM Transactions on Economics and Computation, 10(1):1-31, 2022. Google Scholar
  14. Stefanos Leonardos, Barnabé Monnot, Daniël Reijsbergen, Efstratios Skoulakis, and Georgios Piliouras. Dynamical analysis of the eip-1559 ethereum fee market. In Proceedings of the 3rd ACM Conference on Advances in Financial Technologies, AFT '21, pages 114-126, New York, NY, USA, 2021. Association for Computing Machinery. URL: https://doi.org/10.1145/3479722.3480993.
  15. Stefanos Leonardos, Daniël Reijsbergen, Daniël Reijsbergen, Barnabé Monnot, and Georgios Piliouras. Optimality despite chaos in fee markets. arXiv preprint arXiv:2212.07175, 2022. Google Scholar
  16. Yulin Liu, Yuxuan Lu, Kartik Nayak, Fan Zhang, Luyao Zhang, and Yinhong Zhao. Empirical analysis of eip-1559: Transaction fees, waiting times, and consensus security. In Proceedings of the 2022 ACM SIGSAC Conference on Computer and Communications Security, CCS '22, pages 2099-2113, New York, NY, USA, 2022. Association for Computing Machinery. URL: https://doi.org/10.1145/3548606.3559341.
  17. Kaihua Qin, Liyi Zhou, and Arthur Gervais. Quantifying blockchain extractable value: How dark is the forest? In 2022 IEEE Symposium on Security and Privacy (SP), pages 198-214. IEEE, 2022. Google Scholar
  18. Daniël Reijsbergen, Shyam Sridhar, Barnabé Monnot, Stefanos Leonardos, Stratis Skoulakis, and Georgios Piliouras. Transaction fees on a honeymoon: Ethereum’s eip-1559 one month later. In 2021 IEEE International Conference on Blockchain (Blockchain), pages 196-204. IEEE, 2021. Google Scholar
  19. Tim Roughgarden. Transaction fee mechanism design for the Ethereum blockchain: An economic analysis of EIP-1559. arXiv preprint arXiv:2012.00854, 2020. Google Scholar
  20. Tim Roughgarden. Transaction fee mechanism design. ACM SIGecom Exchanges, 19(1):52-55, 2021. Google Scholar
  21. Christof Ferreira Torres, Ramiro Camino, et al. Frontrunner jones and the raiders of the dark forest: An empirical study of frontrunning on the ethereum blockchain. In 30th USENIX Security Symposium (USENIX Security 21), pages 1343-1359, 2021. Google Scholar
Questions / Remarks / Feedback
X

Feedback for Dagstuhl Publishing


Thanks for your feedback!

Feedback submitted

Could not send message

Please try again later or send an E-mail
© 2023-2024 Schloss Dagstuhl – LZI GmbH About DROPS Imprint Privacy Contact