Multi-side incentive compatible transaction fee mechanism

Propelled by ongoing advances in blockchain technologies, transaction volumes of major cryptocurrencies like Bitcoin and Ethereum have surged, causing strain on network capacities- a challenge known as the scarcity of transaction inclusion resources. While the widely adopted Transaction Fee Mechanism (TFM) efficiently allocates transaction resources, existing research falls short in achieving simultaneous user incentive compatibility (UIC), miner incentive compatibility (MIC), and miner-user side contract proofness (SCP), essential for blockchain security. In response, we propose the Optimal Revenue Burning (ORB) mechanism, adjusting reserve price and burning rate to deter deviations from honest strategies. Our theoretical analysis strongly supports that ORB mechanism simultaneously satisfy UIC, MIC, and SCP. We also outline conditions for equilibrium strategies. Through simulations, ORB mechanism not only ensures stable miner revenue but also reduces user payments by an average of 5.34%, addressing exorbitant transaction fees. Our research has significant implications for guiding blockchain TFM design.