Briefing
The core research problem is the absence of an incentive-compatible transaction fee mechanism for the new generation of leaderless, multi-proposer, Directed Acyclic Graph (DAG) consensus protocols, which renders them vulnerable to economic manipulation. This paper introduces a foundational breakthrough by proposing the First-Price Auction with Equal Sharing (FPA-EQ) mechanism, which is formally proven to satisfy the novel Strongly Block Producer Incentive Compatible (Strongly BPIC) property, ensuring that all concurrent block producers are motivated to follow the intended fee allocation rule as a Pareto-dominant Nash equilibrium. The single most important implication is that achieving this strong incentive compatibility in leaderless architectures fundamentally requires a calculated compromise on maximum theoretical welfare, establishing a new trade-off frontier for future blockchain economic design.
Context
Prior to this work, transaction fee mechanisms were predominantly designed for sequential, single-leader blockchain architectures like Proof-of-Work and classic Proof-of-Stake, where a single proposer captures the entire block reward, simplifying the game-theoretic analysis. The rise of high-throughput DAG-based consensus protocols, which allow multiple validators to concurrently propose blocks, created a foundational theoretical gap → the established single-proposer fee models failed to align incentives in a multi-proposer environment, leading to potential collusion or sub-optimal transaction inclusion strategies.
Analysis
The paper’s core idea is to decouple the transaction inclusion decision from the fee collection process through a new incentive structure. The mechanism is modeled as a multi-stage game where the key primitive is the Strongly BPIC property. Conceptually, the FPA-EQ mechanism works by having users submit their transaction bids in a first-price auction format.
Crucially, the total transaction fees collected within a round are then equally shared among all block producers who contributed to the canonical DAG structure for that round, rather than being awarded solely to the producer who included the transaction. This equal sharing of the collective revenue is the fundamental difference, strategically eliminating the competitive incentive for individual producers to manipulate transaction ordering or inclusion for localized profit.
Parameters
- Strongly BPIC Welfare Guarantee → 63.2% – The minimum fraction of the maximum-possible expected social welfare guaranteed by the FPA-EQ mechanism at equilibrium.
- Block Producers → Multiple – The number of validators concurrently contributing to the DAG structure, defining the “leaderless” nature of the system.
- Mechanism Type → First-Price Auction with Equal Sharing – The specific auction and fee distribution rule proposed to achieve strong incentive compatibility.
Outlook
This research establishes the foundational economic framework for the next generation of high-throughput, leaderless consensus systems, moving beyond purely technical scalability to address economic security. The immediate next steps involve integrating the FPA-EQ mechanism into existing DAG protocols like Narwhal/Bullshark or Mysticeti and empirically validating the 63.2% welfare bound under real-world network conditions. In the next three to five years, this work will likely serve as the blueprint for all transaction fee mechanisms in multi-proposer architectures, unlocking truly decentralized and economically robust high-speed settlement layers that were previously hampered by theoretical incentive misalignment.
Verdict
The introduction of the Strongly BPIC property and the FPA-EQ mechanism provides the essential game-theoretic primitive for securing the economic foundation of all future leaderless, high-throughput blockchain architectures.
