A Framework for Combined Transaction Posting and Pricing for Layer 2 Blockchains

TL;DR

This paper introduces a unified framework for transaction posting and pricing in Layer 2 blockchains, addressing the interplay between L1 gas fees, L2 congestion, and user behavior, validated through simulations.

Contribution

It presents a dynamic model integrating posting and pricing strategies, deriving optimal policies and theoretical foundations for congestion-aware fee mechanisms.

Findings

Optimal threshold-based posting policy derived

Framework effectively balances cost recovery and congestion control

Validated through comprehensive simulations

Abstract

This paper presents a comprehensive framework for transaction posting and pricing in Layer 2 (L2) blockchain systems, focusing on challenges stemming from fluctuating Layer 1 (L1) gas fees and the congestion issues within L2 networks. Existing methods have focused on the problem of optimal posting strategies to L1 in isolation, without simultaneously considering the L2 fee mechanism. In contrast, our work offers a unified approach that addresses the complex interplay between transaction queue dynamics, L1 cost variability, and user responses to L2 fees. We contribute by (1) formulating a dynamic model that integrates both posting and pricing strategies, capturing the interplay between L1 gas price fluctuations and L2 queue management, (2) deriving an optimal threshold-based posting policy that guides L2 sequencers in managing transactions based on queue length and current L1 conditions, and (3) establishing theoretical foundations for a dynamic L2 fee mechanism that balances cost recovery with congestion control. We validate our framework through simulations.