The Economic Security of Exponential EIP-1559
Paper shows how to set EIP-1559 parameters so gas fees economically deter usage above a chosen threshold.
The paper studies EIP-1559 parameter selection so collected gas fees have a guaranteed lower bound whenever usage over a time window exceeds a chosen threshold, high enough to deter excess use such as long-term state growth. It covers Ethereum's pure exponential EIP-1559 and a variant used by Robinhood Chain and Arbitrum. For the exponential version the authors characterize the revenue-minimizing gas-usage distribution; for the variant they construct a distribution whose fee revenue approximates the minimum. They then show how to set economically secure parameters and discuss the tradeoffs.
- Parameters should guarantee a fee floor once usage exceeds a threshold
- Covers Ethereum's exponential EIP-1559 plus a Robinhood and Arbitrum variant
- Authors characterize or approximate the revenue-minimizing usage distribution
- The bound can economically deter usage tied to state growth
Full article158 words · extracted from arxiv.org · click to collapse
We consider the problem of parameter selection for EIP-1559, a widely used gas pricing mechanism for blockchains. As opposed to previous work, we aim to achieve economic security, where the chosen parameters guarantee a lower bound on total collected gas fees whenever usage over a given time window exceeds a specified threshold. This bound can be set prohibitively high, thereby economically deterring usage above a desired level. Such guarantees are particularly relevant to long-term objectives such as limiting state growth. We apply our approach to the pure exponential version of EIP-1559 which Ethereum uses and to a variant used by Robinhood Chain and Arbitrum. To achieve economic security, we first characterize the revenue-minimizing gas-usage distribution for the exponential version and for the other variant we construct a distribution whose associated fee revenue provably approximates the minimum. Using these results, we then demonstrate how to set economically secure mechanism parameters for both variants and we discuss the associated tradeoffs.
Text extracted automatically; images, tables and formatting may be missing. Original: https://arxiv.org/abs/2610.10333