Modeling Miner Incentives in Discounted Transaction Fee Mechanisms

This paper explores how blockchain miners decide which transactions to include in limited-size blocks when future profits are discounted. By modeling the transaction fee mechanism (TFM) as an optimization problem similar to online buffer management in computer networks, it introduces new deterministic and randomized algorithms that outperform traditional methods in discounted settings. The study provides a theoretical framework for understanding miner incentives, showing how time preference and future uncertainty shape the economics of decentralized transaction processing.