Selfish & opaque transaction ordering in the Bitcoin blockchain

Abstract

Most public blockchain protocols, including the popular Bitcoin and Ethereum blockchains, do not formally specify the order in which miners should select transactions from the pool of pending (or uncommitted) transactions for inclusion in the blockchain. Over the years, informal conventions or "norms" for transaction ordering have, however, emerged via the use of shared software by miners, e.g., the GetBlockTemplate (GBT) mining protocol in Bitcoin Core. Today, a widely held view is that Bitcoin miners prioritize transactions based on their offered "transaction fee-per-byte. " Bitcoin users are, consequently, encouraged to increase the fees to accelerate the commitment of their transactions, particularly during periods of congestion. In this paper, we audit the Bitcoin blockchain and present statistically significant evidence of mining pools deviating from the norms to accelerate the commitment of transactions for which they have (i) a selfish or vested interest, or (ii) received dark-fee payments via opaque (non-public) side-channels. As blockchains are increasingly being used as a record-keeping substrate for a variety of decentralized (financial technology) systems, our findings call for an urgent discussion on defining neutrality norms that miners must adhere to when ordering transactions in the chains. Finally, we make our data sets and scripts publicly available. CCS CONCEPTS• Security and privacy → Social aspects of security and privacy; Economics of security and privacy.

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

“…The risk of transactions being frontrun by bots [23,28,65,71], for instance, creates the need for transaction privacy. Mining pools that address this need also facilitate, unsurprisingly, offchain payments via which transaction issuers can (privately) incentivize the miners [4,14,34,49,55,70]. We view these developments as natural and logical steps in the evolution of blockchains and back our assertions with empirical observations.…”

“…The rate at which users issue transactions in permissionless blockchains, e.g., Bitcoin [52] and Ethereum [72], is often much higher than the rate at which miners can include them in a block [24,41,45,48,49]. Users typically issue transactions using a wallet software [9,27,51,66], whose primary functionality is determining an "appropriate" fee for a given transaction.…”

“…We use the term "fee" to refer generally to the incentive offered by a user to miners for prioritizing the inclusion of their transaction in a block, albeit its exact form may vary, e.g., fee rate in Bitcoin and gas price in Ethereum. This (prioritization) fee varies, unsurprisingly, as a function of the level of congestion in the blockchain [49] as well as the distribution of fees across available transactions. Inferring either of these is, however, deceptively complicated.…”

“…At first glance, these tasks appear straightforward, since every transaction is broadcast to all miners in the blockchain. A user could simply gather all transactions broadcast over time and reconstruct the set of uncommitted transactions available to a miner (i.e., contents of the miner's Mempool) at any point of time [48]. We refer to this assumption of a public and uniform view (across miners) of all available transactions as contention transparency.…”

“…We refer to this assumption of a public and uniform view (across miners) of all available transactions as contention transparency. If contention transparency exists, a user could rank order available transactions by their fee (based on which miners should select transactions for inclusion) and estimate the commit delay of any transaction [49]. Consequently, they could determine the fee that they must pay to guarantee inclusion of their transaction in a given block.…”