[Research] Bitcoin After Block Rewards: preventing miner deviation as the block rewards approaches zero

The paper shared by Junhyuk Lee focuses on the security implications for Bitcoin in a scenario where block rewards are eliminated, transitioning to a fee-only regime. The study specifically investigates the conditions under which miners might deviate from honest mining as a rational strategy due to profit maximization and explores potential mechanisms to prevent such deviations.

A key finding of the research is the identification of a specific threshold (G_t) that indicates when it becomes economically rational for miners to deviate from honest behavior. This threshold becomes relevant in simulations showing that even a small fee differential, as low as 0.17% of transaction fees, could incentivize deviation once block rewards are phased out through continuous halving.

To counteract this risk, the paper proposes and evaluates several mitigation strategies including the implementation of base fees, fee floors, and adaptive block sizing. These strategies aim to stabilize miner incentives and maintain network integrity in the absence of block rewards. The effectiveness of these mitigations in preventing large-scale deviations from honest mining practices is a central theme of this analysis.

For further reading on the topic and related discussions, the paper can be accessed at arxiv. Additional insights and modeling efforts discussing fee-equilibrium and its impact on miner behavior post-block rewards can be explored through discussions hosted on Delving Bitcoin at Research on Bitcoin Post-Block Rewards and Addressing Diminishing Block Subsidy. Feedback on the assumptions and realism of proposed soft fork mitigations within the model is encouraged to refine and enhance the study's conclusions.