Analyzing the Incentives in Transaction Fee Mechanism Design

Abstract

We study the emerging field of transaction fee mechanism design and the incentives that make a "good'' transaction fee mechanism. We cover the history of the field since its inception, from the idea of a "Dream TFM'', to the characterization of possible types of mechanism and collusion, in hopes that this thesis serves as a self-contained foundation to the field of transaction fee mechanism design. We highlight the distinction between certain related notions of collusion resistance and miner simplicity via a constructive mechanism which is classified differently by each definition and give a list of four interesting open problems and suggest a possible approach towards solving one of them by trying to first prove a separability requirement.