Dissecting Bitcoin and Ethereum Transactions: On the Lack of Transaction Contention and Prioritization Transparency in Blockchains

Johnnatan Messias*, Vabuk Pahari, Balakrishnan Chandrasekaran, Krishna P. Gummadi, Patrick Loiseau

*Corresponding author for this work

Research output: Chapter in Book / Report / Conference proceedingConference contributionAcademicpeer-review

Abstract

In permissionless blockchains, transaction issuers include a fee to incentivize miners to include their transactions. To accurately estimate this prioritization fee for a transaction, transaction issuers (or blockchain participants, [email protected] generally) rely on two fundamental notions of transparency, namely contention and prioritization transparency. Contention transparency implies that participants are aware of every pending transaction that will contend with a given transaction for inclusion. Prioritization transparency states that the participants are aware of the transaction or prioritization fees paid by every such contending transaction. Neither of these notions of transparency holds well today. Private relay networks, for instance, allow users to send transactions privately to miners. Besides, users can offer fees to miners via either direct transfers to miners’ wallets or off-chain payments—neither of which are public. In this work, we characterize the lack of contention and prioritization transparency in Bitcoin and Ethereum resulting from such practices. We show that private relay networks are widely used and private transactions are quite prevalent. We show that the lack of transparency facilitates miners to collude and overcharge users who may use these private relay networks despite them offering little to no guarantees on transaction prioritization. The lack of these transparencies in blockchains has crucial implications for transaction issuers as well as the stability of blockchains. Finally, we make our data sets and scripts publicly available.

Original languageEnglish
Title of host publicationFinancial Cryptography and Data Security
Subtitle of host publication27th International Conference, FC 2023, Bol, Brač, Croatia, May 1–5, 2023, Revised Selected Papers, Part II
EditorsFoteini Baldimtsi, Christian Cachin
PublisherSpringer Science and Business Media Deutschland GmbH
Pages221-240
Number of pages20
Volume2
ISBN (Electronic)9783031477515
ISBN (Print)9783031477508
DOIs
Publication statusPublished - 2024
Event27th International Conference on Financial Cryptography and Data Security, FC 2023 - Bol, Croatia
Duration: 1 May 20235 May 2023

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume13951
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference27th International Conference on Financial Cryptography and Data Security, FC 2023
Country/TerritoryCroatia
CityBol
Period1/05/235/05/23

Bibliographical note

Publisher Copyright:
© 2024, The Author(s).

Funding

Acknowledgments. This research was supported in part by a European Research Council (ERC) Advanced Grant “Foundations for Fair Social Computing”, funded under the European Union’s Horizon 2020 Framework Programme (grant agreement no. 789373). It was also supported by MIAI @ Grenoble Alpes (ANR-19-P3IA-0003) and by the French National Research Agency under grant ANR-20-CE23-0007.

FundersFunder number
European Research Council
Horizon 2020 Framework Programme789373
Horizon 2020 Framework Programme
Agence Nationale de la RechercheANR-20-CE23-0007
Agence Nationale de la Recherche
MIAI @ Grenoble AlpesANR-19-P3IA-0003

    Keywords

    • Bitcoin
    • Contention transparency
    • Ethereum
    • MEV
    • Prioritization transparency
    • Private transactions

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