Transaction fee mechanisms robust to welfare-increasing collusion

Abstract

To allocate transactions to blocks, cryptocurrencies use auction-esque transaction fee mechanisms (TFMs). A conjecture of Roughgarden (2024) asks whether there is a TFM that is incentive compatible for both users and the miner and is also resistant to a collusion that allows them to jointly increase overall welfare. We resolve this question in the negative for deterministic TFMs, through a comprehensive characterization of designs robust to this form of collusion. For randomized TFMs, we show limits on the efficiency they can achieve.