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Topic: Incentive of selfish mining under volatile block rewards (Read 123 times)

legendary
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Moreover, this could create a stronger incentive for miners to prioritize high-fee transactions over lower-fee ones, which can even lead to increased transaction fees and decreased network accessibility for smaller miners. These are more like flaws that exist in a decentralised system because even if power is relatively shared it can still be abused by people who hold huge amounts just like mining pools with tremendous hash rates.
Miners are already incentivised to prioritize higher fees over lower fees, that is by the design of the network. As it stands now, Bitcoin is already far less decentralized with 70% of the network centralized around 4 mining pools. They can always collude to artificially inflate the fees at any point in time, just that orphaning blocks is an entirely different ball game and the incentive would be drastically different.
I read through the abstract and I can say a fixed rate might indeed be better to avoid this, although not disrupting the  fact that an improved solution might even come before then.
I doubt that we would want to interfere with the free market forces in the fee market. There would be more problems created than solved in this case. It's quite difficult to incentivise miners to immediately broadcast whatever blocks that they have mined since the consensus function would have to be modified significantly.
sr. member
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Hope Jeremiah 17vs7
Moreover, this could create a stronger incentive for miners to prioritize high-fee transactions over lower-fee ones, which can even lead to increased transaction fees and decreased network accessibility for smaller miners. These are more like flaws that exist in a decentralised system because even if power is relatively shared it can still be abused by people who hold huge amounts just like mining pools with tremendous hash rates.
Ironic as it seems, it is a beautiful thing for this to be noticed because it shows advancement of research findings to man. Exploit can be find on almost anything with time and that is known, now before it actually become a real pain for decentralization and the Bitcoin network, a feasible solution will have likely been implemented, because a problem known is a problem that can be solve.

I read through the abstract and I can say a fixed rate might indeed be better to avoid this, although not disrupting the  fact that an improved solution might even come before then.
sr. member
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For example, if median block reward is 0.1 BTC, and due to network congestion, the most recent block paid the miner 0.5 BTC, it might be a profitable strategy for a selfish miner to orphan it, because claiming 0.5 BTC with just one block is more profitable than mining five.
You do have a solid point. The potential for selfish mining to become kinda more viable in the transaction-fee era actually raises topics  worth discussing about the long-term security and probably possible flaws of decentralization on the Bitcoin network. Because If miners can profitably manipulate the blockchain by orphaning high-fee blocks it could actually lead to a concentration of power among large mining pools undermining the network's decentralized nature.

Moreover, this could create a stronger incentive for miners to prioritize high-fee transactions over lower-fee ones, which can even lead to increased transaction fees and decreased network accessibility for smaller miners. These are more like flaws that exist in a decentralised system because even if power is relatively shared it can still be abused by people who hold huge amounts just like mining pools with tremendous hash rates.
legendary
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Farewell, Leo
Personally I think one reason selfish miners won't be able to take advantage of those vulnerabilities is because the bitcoin network has the ability to adjust it's difficulty depending on the last mining duration.
In the paper, it is demonstrated that difficulty adjustment is currently discouraging selfish mining, because the selfish miner has to incur a significant loss during initial epoch, either because his blocks are getting orphaned, or because he is not mining for that period at all to decrease difficulty (and therefore incurs the real cost of not mining).

But in the transaction-fee era, difficulty adjustment does not carry the same weigh. Losses during the initial epoch may be mitigated or even eliminated, depending on the variable fee rate. For example, if median block reward is 0.1 BTC, and due to network congestion, the most recent block paid the miner 0.5 BTC, it might be a profitable strategy for a selfish miner to orphan it, because claiming 0.5 BTC with just one block is more profitable than mining five.
sr. member
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I stumbled across this paper that was published a month ago, describing mining strategies on the post fixed block reward era. I found it interesting for discussion, and I share it: https://arxiv.org/pdf/2411.11702.
The competition of people trying to get their transactions included in the next block, being the primary factor that determines block reward, is what causes the volatility. If a selfish miner removes honest miners' blocks from the canonical chain, it can extend the block generation time, and make the competition more intense, which will increase his profitability. The existence of real cost (block subsidy) does not allow this strategy to be profitable at the moment.
I actually glanced through the pdf file, and from a technical Bitcoin perspective the writeup highlights an interesting dynamic related to block reward and mining strategy but most negative ones are still not feasible.

Aside from the fact that bitcoin block reward is designed to decrease over time, with the halving event occurring approximately every 4 years,  As block reward decreases transaction fees become a more significant component of mining in general meaning smaller sats will have more value as time passes.

Personally I think one reason selfish miners won't be able to take advantage of those vulnerabilities is because the bitcoin network has the ability to adjust it's difficulty depending on the last mining duration. This means if they extend block  generation time then next block's  difficulty will be reduced So it would become more difficult for them to extend block generation time further.
legendary
Activity: 1512
Merit: 7340
Farewell, Leo
I stumbled across this paper that was published a month ago, describing mining strategies on the post fixed block reward era. I found it interesting for discussion, and I share it: https://arxiv.org/pdf/2411.11702.

The competition of people trying to get their transactions included in the next block, being the primary factor that determines block reward, is what causes the volatility. If a selfish miner removes honest miners' blocks from the canonical chain, it can extend the block generation time, and make the competition more intense, which will increase his profitability. The existence of real cost (block subsidy) does not allow this strategy to be profitable at the moment.
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