Transaction Fee Mechanism Design for Leaderless Blockchain Protocols

Pranav Garimidi; Lioba Heimbach; Tim Roughgarden

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arXiv · 2505.17885

Transaction Fee Mechanism Design for Leaderless Blockchain Protocols

Pranav Garimidi·Lioba Heimbach·Tim Roughgarden

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Abstract

We initiate the study of transaction fee mechanism design for blockchain protocols in which multiple block producers contribute to the production of each block. Our contributions include: - We propose an extensive-form (multi-stage) game model to reason about the game theory of multi-proposer transaction fee mechanisms. - We define the strongly BPIC property to capture the idea that all block producers should be motivated to behave as intended: for every user bid profile, following the intended allocation rule is a Nash equilibrium for block producers that Pareto dominates all other Nash equilibria. - We propose the first-price auction with equal sharing (FPA-EQ) mechanism as an attractive solution to the multi-proposer transaction fee mechanism design problem. We prove that the mechanism is strongly BPIC and guarantees at least a 63.2% fraction of the maximum-possible expected welfare at equilibrium. - We prove that the compromises made by the FPA-EQ mechanism are qualitatively necessary: no strongly BPIC mechanism with non-trivial welfare guarantees can be DSIC, and no strongly BPIC mechanism can guarantee optimal welfare at equilibrium.

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Pranav Garimidi, Lioba Heimbach, Tim Roughgarden. 2025-05-26. Transaction Fee Mechanism Design for Leaderless Blockchain Protocols. https://arxiv.org/abs/2505.17885

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