Transaction Propagation on Permissionless Blockchains: Incentive and Routing Mechanisms

TL;DR

This paper addresses the lack of incentives in permissionless blockchain transaction propagation by proposing a fee-sharing incentive mechanism and an efficient routing method that reduces redundant transmissions and costs.

Contribution

It introduces a Sybil-proof incentive scheme for transaction propagation and a generic routing mechanism that minimizes communication overhead in blockchain networks.

Findings

Incentive mechanism ensures rational nodes are motivated to propagate transactions.

Routing reduces propagation redundancy from network size to average shortest path length.

The combined approach enhances sustainability and efficiency of permissionless blockchains.

Abstract

Existing permissionless blockchain solutions rely on peer-to-peer propagation mechanisms, where nodes in a network transfer transaction they received to their neighbors. Unfortunately, there is no explicit incentive for such transaction propagation. Therefore, existing propagation mechanisms will not be sustainable in a fully decentralized blockchain with rational nodes. In this work, we formally define the problem of incentivizing nodes for transaction propagation. We propose an incentive mechanism where each node involved in the propagation of a transaction receives a share of the transaction fee. We also show that our proposal is Sybil-proof. Furthermore, we combine the incentive mechanism with smart routing to reduce the communication and storage costs at the same time. The proposed routing mechanism reduces the redundant transaction propagation from the size of the network to a factor of average shortest path length. The routing mechanism is built upon a specific type of consensus protocol where the round leader who creates the transaction block is known in advance. Note that our routing mechanism is a generic one and can be adopted independently from the incentive mechanism.