Base Fee Manipulation in Ethereum's EIP-1559 Transaction Fee Mechanism | Protocol Labs Research
Base fee manipulation in Ethereum's EIP-1559 transaction fee mechanism
Date: 2023-04-22
Conference: DISC 2023 / 2023.10.09
Location: L'Aquila, Italy
Authors: Sarah Azouvi, Guy Goren, Lioba Heimbach, Alexander Hicks
Group: ConsensusLab
Area: Distributed systems
Abstract
In 2021 Ethereum adjusted the transaction pricing mechanism by implementing EIP-1559, which introduces the base fee - a fixed network fee per block that is burned and adjusted dynamically in accordance with network demand. The authors of the Ethereum Improvement Proposal (EIP) noted that a miner with more than 50% of the mining power might have an incentive to deviate from the honest mining strategy. Instead, such a miner could propose a series of empty blocks to increase its future rewards. In this paper, we generalize this attack and show that under rational player behavior, deviating from the honest strategy can be profitable for a miner with less than 50% of the mining power. Further, even when miners do not collaborate, it is rational for smaller mining power miners to join the attack.