Bandwidth Fee Mechanisms for Certified Transaction Dissemination

2026-09-30

AI Summary

This study addresses the challenges of bandwidth pricing and incentive alignment in pre-consensus transaction propagation within blockchain networks. By modeling bandwidth allocation as a double procurement auction, the authors employ game theory, auction theory, and fluid approximation analysis to characterize the theoretical upper bounds imposed by collusive behavior on incentive compatibility. The work demonstrates that specific non-trivial mechanisms cannot simultaneously satisfy multi-party incentive compatibility. Accordingly, it proposes an individually incentive-compatible greedy routing mechanism coupled with an EIP-1559-style cross-block dynamic pricing rule. Furthermore, the local stability of this novel mechanism is established for large-scale markets.

Abstract

We study bandwidth fee mechanisms (BFMs) for pricing threshold-certified transaction dissemination before consensus. Analogous to transaction fee mechanisms for computation, BFMs price blockchain communication, which is especially relevant when dissemination is separated from consensus and execution. We model BFMs as two-sided procurement auctions between users submitting transactions and validators receiving and forwarding them. Any validator may serve as a transaction's source and forward it to a threshold of attesters. The model accounts for receipt from the user and subsequent transfers between validators, while abstracting away unrestricted multi-hop gossip and network topology. We establish limits on myopic incentive compatibility: no nontrivial transcript-based BFM prevents profitable collusion between two validators, and no nontrivial BFM simultaneously satisfies incentive compatibility for individual users, individual validators, and coalitions of one validator and one user. On the feasibility side, we give a greedy-route posted-price mechanism that is incentive compatible for every individual user and validator. We also study bandwidth pricing across blocks. Assuming honest validator execution, we propose an EIP-1559-style price-update rule whose fluid approximation has a unique fixed point that is locally stable for sufficiently small step sizes. In large markets, prices starting near this point remain nearby with high probability over any fixed time horizon.

Problem

• Bandwidth Fee Mechanisms
• Transaction Dissemination
• Incentive Compatibility
• Two-sided Procurement Auctions
• Blockchain Pricing

Innovation

• Bandwidth Fee Mechanisms
• Incentive Compatibility
• Procurement Auctions
• Greedy-Route Posted-Price Mechanism
• EIP-1559 Price Update