Subject: Re: [bitcoin-dev] Addressing the possibility of profitable fee manipulation attacks

From: Nagaev Boris <[email-masked]>
Date: Sun, 17 Dec 2023 21:30:19 -0300

On Sun, Dec 17, 2023 at 1:47 PM ArmchairCryptologist via bitcoin-dev
<[email-masked]> wrote:
> Critically, this means that the higher the ratio of the hashrate is participating, the lower the cost of the attack. If 100% of miners participate with a ratio of transactions equal to their hashrate, the cost of the attack is zero, since every participating miner will get back on average 100% of the fees they contributed, and 0% of the fees will be lost to honest miners (of which there are none).

It would not be an equilibrium, because each of them can increase his
profit by not participating. He can still collect fees from
fee-stuffing transactions of others and high fees from transactions of
normal users.

> Observe also that miners would not have to actively coordinate or share funds in any way to participate. If a miner with 10% of the participating hashrate contributes 10% of the fee-stuffing transactions, they would also get back on average 10% of the total fees paid by transactions that are included in blocks mined by participating miners, giving them 10% of the profits. As such, each participating miner would simply have to watch the mempool to verify that the other participating miners are still broadcasting their agreed rate/ratio of transactions, the rest should average out over time.

He can pretend to have less hashrate and mine some blocks under the
table. For example, a miner who has 10% real hash rate could say to
other colluding miners that he only has 5%. Another 5% are secretly
allocated to a new pool. So his share of costs of fee-stuffing
transactions decreases, while he actually collects the same amount of
fees using both public and secret parts of his hash rate. Eventually
every rational participant of this collusion will do this and the
ratio of participating miners will decrease.

-- 
Best regards,
Boris Nagaev