DAG-Based Blockchains: Game Theory Reveals Optimal Fee Sharing Strategy
New research shows collaborative fee sharing boosts throughput by up to 40% over random allocation.
A recent paper published at the 2025 IEEE International Conference on Blockchain and Cryptocurrency (ICBC) by Sebastian Müller and Alexandre Reiffers-Masson applies game-theoretic analysis to transaction selection in DAG-based distributed ledgers. The authors model validator behavior under two fee allocation mechanisms: Random Fee Allocation (RFA), where one validator gets the entire fee, and Collaborative Fee Sharing (CFS), where fees are split equally. Using a single-shot game framework, they derive symmetric Nash equilibria for each mechanism and propose an optimization method to compute them.
Numerical simulations reveal that CFS consistently outperforms RFA—achieving higher throughput and greater validator rewards, particularly when fee distributions are skewed. Interestingly, the study also shows that the proportional selection strategy (picking transactions in proportion to fees) can outperform the Nash equilibrium of RFA in many scenarios. These results offer practical guidance for designing more efficient and fair incentive structures in DAG-based blockchains, potentially reducing waste from self-interested validator behavior.
- CFS (Collaborative Fee Sharing) yields higher throughput and rewards than RFA (Random Fee Allocation) at Nash equilibrium.
- CFS outperforms RFA most significantly under skewed fee distributions (e.g., 80/20 splits).
- Proportional transaction selection often beats RFA's Nash equilibrium, suggesting naive heuristics can be surprisingly effective.
Why It Matters
Optimizing validator incentives in DAG-based ledgers can boost network throughput and reduce fee inefficiencies for real-world blockchains.