Mempool Incentive Compatibility

Mempool Incentive Compatibility

Original Postby rustyrussell

Posted on: February 26, 2024 05:19 UTC

The email explores the dynamics and potential outcomes of a strategy related to transaction fees within a blockchain context, specifically focusing on the differences in outcome when this strategy is applied at different points within the mempool.

It outlines a scenario where users attempt to manipulate transaction fees to their advantage, which can result in three distinct outcomes depending on the fluctuation of fees over time. If fees increase, the user's transaction gets evicted from the mempool, which is considered a win because it allows for a free relay. Should fees remain stable, the user misses out on participating in that particular round. Conversely, if fees decrease sufficiently and the transaction is processed, the user ends up losing.

Further analysis contrasts this strategy when applied at the tail end of the mempool versus at the boundary of the next block. At the next block boundary, the outcomes are slightly different: an increase in fees still results in eviction and is seen as a win, but if fees do not increase, the transaction gets mined, leading to a loss for the user. This approach at the block boundary is noted to be more costly than playing the game at the mempool's tail, highlighting an increased risk and expense associated with attempting to manipulate transaction fees at this point.

Despite these nuances, the email raises concerns about the potential for denial of service (DoS) attacks facilitated by users playing this fee manipulation game at both the tail of the mempool and the block boundary. The author acknowledges an increase in DoS opportunities due to this strategy but argues that it does not significantly worsen the situation compared to existing vulnerabilities. Nonetheless, the author expresses uncertainty and seeks feedback on whether any critical aspects of this analysis might have been overlooked, indicating an openness to further discussion and insight into the matter.