# Designing Redistribution Mechanisms for Reducing Transaction Fees in Blockchains

arXiv: https://arxiv.org/abs/2401.13262 · HTML: https://mlsanity.com/paper/2401.13262/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 4 of its 41 references that are in the map.
- First posted on arXiv 24 Jan 2024.

## Builds on (most cited first, 4 of 4)

- [Transaction Fee Mechanism Design](https://mlsanity.com/paper/2106.01340/) (2021)
- [Foundations of Transaction Fee Mechanism Design](https://mlsanity.com/paper/2111.03151/) (2021)
- [BitcoinF: Achieving Fairness for Bitcoin in Transaction-Fee-Only Model](https://mlsanity.com/paper/2003.00801/) (2020)
- [Wendy, the Good Little Fairness Widget](https://mlsanity.com/paper/2007.08303/) (2020)

## Abstract (arXiv)

Blockchains deploy Transaction Fee Mechanisms (TFMs) to determine which user transactions to include in blocks and determine their payments (i.e., transaction fees). Increasing demand and scarce block resources have led to high user transaction fees. As these blockchains are a public resource, it may be preferable to reduce these transaction fees. To this end, we introduce Transaction Fee Redistribution Mechanisms (TFRMs) -- redistributing VCG payments collected from such TFM as rebates to minimize transaction fees. Classic redistribution mechanisms (RMs) achieve this while ensuring Allocative Efficiency (AE) and User Incentive Compatibility (UIC). Our first result shows the non-triviality of applying RM in TFMs. More concretely, we prove that it is impossible to reduce transaction fees when (i) transactions that are not confirmed do not receive rebates and (ii) the miner can strategically manipulate the mechanism. Driven by this, we propose Robust TFRM (textsfR-TFRM): a mechanism that compromises on an honest miner's individual rationality to guarantee strictly positive rebates to the users. We then introduce robust and rational TFRM (textsfR2textsf-TFRM) that uses trusted on-chain randomness that additionally guarantees miner's individual rationality (in expectation) and strictly positive rebates. Our results show that TFRMs provide a promising new direction for reducing transaction fees in public blockchains.