Bribes to Miners: Evidence from Ethereum

TL;DR

This paper investigates bribery in Ethereum, analyzing its prevalence, effects on the blockchain and traditional markets, and the impact of the London Fork's new fee mechanism on bribery dynamics.

Contribution

It introduces a method to detect and measure bribery in Ethereum, revealing its widespread nature, effects on blockchain metrics, and connections to traditional financial markets.

Findings

Bribery is concentrated among a small group of users.

The London Fork's fee mechanism has complex effects on bribery behavior.

Ethereum bribery correlates with stock market indices like S&P 500 and Nasdaq.

Abstract

In blockchain, bribery is an inevitable problem since users with various goals can bribe miners by transferring cryptoassets. To alleviate the negative effects of such collusion, Ethereum blockchain implemented new transaction fee mechanism in the London Fork, which was deployed on August 5th, 2021. In this paper, we first filter potential bribery by scanning Ethereum transactions, and the potential bribers and bribees are centralized in a small group. Then we construct bribing proxies to measure the active level of bribery and then investigate the effects of bribery. Consequently, bribery can influence both Ethereum and other mainstream blockchains, in aspects of underlying cryptocurrency, transaction statistics, and network adoption. Moreover, the London Fork shows complicated effects on relationship between bribery and blockchain factors. Besides, bribery in Ethereum relates to stock markets, e.g., S&P 500 and Nasdaq, implying implicit interlinks between blockchain and traditional finance.