Foundations of Transaction Fee Mechanism Design with Elaine Shi | a16z crypto research talks

Cryptocurrencies today use auctions to decide which transactions get confirmed in the block, yet classical auctions fail in such a decentralized environment because even the auctioneer can be a strategic player. Even the second-price auction – a golden standard in classical mechanism design – fails in the blockchain environment. In this talk, Elaine Shi (Carnegie Mellon University) introduces a new foundation for mechanism design in a decentralized environment. She proves an impossibility result that rules out the existence of an idealized transaction fee mechanism that incentivizes honest behavior for the user, the miner, and a miner-user coalition at the same time. Elaine then argues why earlier modeling choices are too draconian, and how we can overcome this lower bound by capturing the hidden costs certain deviations. About the speaker Elaine is an Associate Professor at Carnegie Mellon University. Her research interests include cryptography, algorithms, and foundations of blockchains. Prior to CMU, she taught at the University of Maryland and Cornell University. She is a recipient of the Packard Fellowship, the Sloan Fellowship, the ONR YIP Award, the NSA best scientific cybersecurity paper award, and various other best paper awards. More: http://elaineshi.com/ About a16z crypto research a16z crypto research is a multidisciplinary lab that works closely with our portfolio companies and others toward solving the important problems in the space, and toward advancing the science and technology of the next generation of the internet. Our researchers are technologists, scientists, cryptographers, and cryptocurrency experts, working to bridge the worlds of academic theory with industry practice, and to help shape crypto and web3 as a formal area of study. More about us: a16z.com/2022/04/21/announcing-a16z-crypto-research More from the a16z crypto team - Subscribe to our 'web3 weekly newsletter': a16zcrypto.substack.com - Listen to our 'web3 with a16z' podcast: a16zcrypto.com/web3-with-a16z-podcast/ - Read more of our work: a16zcrypto.com