Mempool Incentive Compatibility

Mempool Incentive Compatibility

Original Postby rustyrussell

Posted on: March 19, 2024 02:33 UTC

The discussion highlights the challenges and considerations in implementing certain blockchain mechanisms, particularly emphasizing the difficulty in predicting when a transaction will be mined or estimating the percentage of hash power that might delay their operations to collect fees from a pinning transaction.

These elements are crucial for understanding the practicality of delaying transactions by a specific number of blocks, which could range from 50 to 135 blocks. Such delays may not be feasible for many blockchain applications, underlining the need for accurate measurements and the implications for system design.

Further analysis reveals skepticism about the feasibility of creating a consensus among miners, especially regarding the assumption that a near-total miner cartel would refrain from executing a reorganization attack for dominance. This skepticism is grounded in the recognition of a 51% attack as a widely acknowledged threat, suggesting a strategic pivot towards software optimization for miners controlling less than the majority of the hash power. The discourse reflects a personal bias favoring the contribution of smaller miners to the ecosystem, advocating for system optimizations that support their participation.

Additionally, the conversation touches upon the diminishing returns of granting a 50% discount to miners, pointing out that such incentives quickly lose their effectiveness. It is argued that within just seven blocks, the error margin for a miner possessing 50% of the hash power drops below 1%, indicating minimal expected returns for any efforts to alter this balance. This insight underlines the complexity of designing incentive structures within the blockchain space, highlighting the need for careful consideration of the dynamics at play among different participants in the mining process.