Local fee markets

This talk studies transaction execution mechanisms (TEMs) for blockchains as the efficient resource allocation across multiple parallel execution queues or “local fee markets.” Abdou Ndiaye (NYU) present a model considering capacity constraints, user valuations, and delay costs in a multi-queue system with an aggregate capacity constraint due to global consensus. He shows that revenue maximization tends to allocate capacity to the highest-paying queue, while welfare maximization generally serves all queues. Optimal relative pricing of different queues depends on factors such as market size, demand elasticity, and the balance between local and global congestion. His results have implications for evolving blockchain architectures, including parallel execution, DAG-based systems, and multiple concurrent proposers, and can help design more efficient TEMs.

For more, see: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4985253

About the presenter

Abdou is an Assistant Professor of Economics at New York University, Leonard N. Stern School of Business, and a Research Affiliate at the Centre for Economic Policy Research. His research focuses on the impact of incentives in macroeconomic environments. He investigates issues related to public finance and the emerging areas of blockchains and decentralized finance.

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