Transaction Fee Market Design for Parallel Execution

Abstract: Given the low throughput of blockchains like Bitcoin and Ethereum, scalability - the ability to process an increasing number of transactions - has become a central focus of blockchain research. One promising approach is the parallelization of transaction execution across multiple threads. However, achieving efficient parallelization requires a redesign of the incentive structure within the fee market. Currently, the fee market does not differentiate between transactions that access multiple high-demand storage keys (i.e., unique identifiers for individual data entries) versus a single low-demand one, as long as they require the same computational effort. Addressing this discrepancy is crucial for enabling more effective parallel execution. In this work, we aim to bridge the gap between the current fee market and the need for parallel execution by exploring alternative fee market designs. To this end, we propose a framework consisting of two key components: a Gas Computation Mechanism (GCM), which quantifies the load a transaction places on the network in terms of parallelization and computation, measured in units of gas, and a Transaction Fee Mechanism (TFM), which assigns a price to each unit of gas. We additionally introduce a set of desirable properties for a GCM, propose several candidate mechanisms, and evaluate them against these criteria. Our analysis highlights two strong candidates: the weighted area GCM, which integrates smoothly with existing TFMs such as EIP-1559 and satisfies a broad subset of the outlined properties, and the time-proportional makespan GCM, which assigns gas costs based on the context of the entire block's schedule and, through this dependence on the overall execution outcome, captures the dynamics of parallel execution more accurately.

• The paper introduces a novel framework that recalibrates transaction fees by integrating Gas Computation Mechanisms accounting for storage key contention and execution time.
• The methodology evaluates candidate models like the weighted area and time-proportional makespan mechanisms to align fee pricing with parallel execution dynamics.
• The proposed design enhances blockchain scalability by more accurately reflecting resource usage, thereby promoting efficient parallel processing.

Transaction Fee Market Design for Parallel Execution

Introduction

The study of blockchain scalability is crucial due to the inherent limitations in transaction throughput in systems like Bitcoin and Ethereum, which employ single-threaded execution models. A promising approach to addressing this is the parallelization of transaction execution across multiple threads, allowing blockchains to better leverage modern multi-core processors. However, efficient parallelization necessitates a redesign of the existing transaction fee market to account for complexities such as storage key contention. Storage keys are unique identifiers for specific data items, and their contention impacts the scheduling constraints and parallel execution potential within a block of transactions.

Traditional transaction fee mechanisms (TFMs), such as the first-price auction model initially used by Ethereum and Bitcoin, lack the sophistication required for parallel execution environments. These models price transactions solely based on computational effort, disregarding constraints introduced by storage key contention. Although Ethereum's transition to EIP-1559, which incorporates a dynamic base fee, represents an improvement, it still operates under a sequential execution paradigm.

In light of these limitations, the paper proposes a novel framework aimed at facilitating efficient parallel execution. This framework is composed of two key components: a Gas Computation Mechanism (GCM) and a Transaction Fee Mechanism (TFM). The GCM measures the load imposed by a transaction on the network in terms of both computational effort and parallelizability, expressed in gas units. The TFM assigns a price to each unit of gas, thereby determining the transaction fee. This paper introduces desirable properties for the GCM, proposes candidate mechanisms, and assesses their performance against the established criteria.

Proposed Framework

Gas Computation Mechanisms

The core innovation of this paper is the introduction of a framework designed to recalibrate the transaction fee market for parallel processing environments. The GCM measures the computational load a transaction places on the network by considering its execution time and the storage key set it accesses. This method contrasts sharply with current fee models that evaluate transactions simply based on computational effort in terms of gas consumption.

This study identifies two promising candidates for the GCM: the weighted area mechanism and the time-proportional makespan mechanism. The weighted area mechanism integrates seamlessly with existing TFMs like EIP-1559, extending them to account for storage key usage. By charging transactions based on the area they occupy with respect to both time and storage key demand, this approach aligns transaction fees with parallel execution ideals. The weights assigned to storage keys can be adjusted almost dynamically, reflecting their demand and contention in the network.

Alternatively, the time-proportional makespan mechanism determines fees based on the overall computational load imposed by the complete block's schedule. This mechanism captures the dynamics of parallel execution by aligning gas costs with the marginal effect each transaction has on the makespan—i.e., the execution time of the full transaction block.

Desirable Properties

In designing these mechanisms, several desirable properties are considered:

• Monotonicity: A GCM should ensure that the gas consumed by a transaction does not increase when its execution time or storage key set shrinks. Conversely, the total gas consumption should increase with a more substantial set of transactions when the bundle increases in size or execution time.
• Efficiency: Ideally, the sum of gas consumed by all transactions within a block should equal the actual execution cost (makespan) of processing that block.
• Easy Gas Estimation: Users should be able to estimate consumption easily, without complex computations involving other transactions.
• Poly-time Computability: The mechanism must be computationally feasible—calculable within polynomial time.

Implications and Future Directions

The development of fee market systems optimized for parallel execution has far-reaching implications for blockchain scalability and efficiency. By differentiating transaction pricing based on storage key demand and execution time, these systems promote better resource allocation within the network, enhance throughput, and reduce contention.

Future research could explore dynamic adjustments to storage key weights, thereby fine-tuning the system's responsiveness to changing demands. Furthermore, integrating these GCMs with advanced transaction scheduling protocols could further optimize blockchain performance.

Implementations of such fee market designs have potential not only in Ethereum but also in other blockchain architectures aiming to support parallel transaction execution, such as Solana and Aptos. These advancements may eventually lead to block-level fee markets that holistically manage diverse resources, including storage, execution, and data availability.

Conclusion

This paper presents a comprehensive framework for transaction fee market design tailored for blockchain systems employing parallel execution. Through a detailed examination of GCMs and an analysis of their properties, the study lays the groundwork for scalable blockchain architectures. The weighted area and time-proportional makespan mechanisms offer practical solutions, each with unique advantages, enabling more sophisticated fee markets for modern blockchain networks. The discourse opened by this research provides a roadmap for future developments, potentially redefining transaction economics in decentralized systems.