Parallel Execution Fee Mechanisms

Abdoulaye Ndiaye

No 19666, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper investigates how pricing schemes can achieve efficient allocations in blockchain systems featuring multiple transaction queues under a global capacity constraint. I model a capacity-constrained blockchain where users submit transactions to different queues—each representing a submarket with unique demand characteristics—and decide to participate based on posted prices and expected delays. I find that revenue maximization tends to allocate capacity to the highest-paying queue, whereas welfare maximization generally serves all queues. Optimal relative pricing of different queues depends on factors such as market size, demand elasticity, and the balance between local and global congestion. My results have implications for the implementation of local congestion pricing for evolving blockchain architectures, including parallel transaction execution, directed acyclic graph (DAG)-based systems, and multiple concurrent proposers.

Keywords: Blockchain; Fintech; Transactions; Parallel computing; Transaction costs; Consensus (search for similar items in EconPapers)
JEL-codes: D47 D85 G12 G23 L86 O33 (search for similar items in EconPapers)
Date: 2024-11
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