Gas Fees

The Marginal Effects of Ethereum Network MEV Transaction Re-Ordering ArXiv ID: 2508.04003 “View on arXiv” Authors: Bruce Mizrach, Nathaniel Yoshida Abstract Two MEV builders now produce nearly 80% of Ethereum blocks. Block builders have the ability to reorder transactions on the blockchain in a way that can be harmful to participants. We estimate they would pay in the aggregate nearly $14 million per month to ensure that they remained in the first quartile of the block. Sandwich attacks, in which a transaction is front-run, are frequent, averaging more than one per block. Gas fees on these transactions pay for nearly 15% of the MEV payments to the validator. These attacks have especially large marginal effects and skew the distribution. Reforms such as gas fee priority or private transaction pools might be helpful. ...

Time-Varying Bidirectional Causal Relationships Between Transaction Fees and Economic Activity of Subsystems Utilizing the Ethereum Blockchain Network ArXiv ID: 2501.05299 “View on arXiv” Authors: Unknown Abstract The Ethereum blockchain network enables transaction processing and smart-contract execution through levies of transaction fees, commonly known as gas fees. This framework mediates economic participation via a market-based mechanism for gas fees, permitting users to offer higher gas fees to expedite pro-cessing. Historically, the ensuing gas fee volatility led to critical disequilibria between supply and demand for block space, presenting stakeholder challenges. This study examines the dynamic causal interplay between transaction fees and economic subsystems leveraging the network. By utilizing data related to unique active wallets and transaction volume of each subsystem and applying time-varying Granger causality analysis, we reveal temporal heterogeneity in causal relationships between economic activity and transaction fees across all subsystems. This includes (a) a bidirectional causal feedback loop between cross-blockchain bridge user activity and transaction fees, which diminishes over time, potentially signaling user migration; (b) a bidirectional relationship between centralized cryptocurrency exchange deposit and withdrawal transaction volume and fees, indicative of increased competition for block space; (c) decentralized exchange volumes causally influence fees, while fees causally influence user activity, although this relationship is weakening, potentially due to the diminished significance of decentralized finance; (d) intermittent causal relationships with maximal extractable value bots; (e) fees causally in-fluence non-fungible token transaction volumes; and (f) a highly significant and growing causal influence of transaction fees on stablecoin activity and transaction volumes highlight its prominence. ...

Gas Fees on the Ethereum Blockchain: From Foundations to Derivatives Valuations ArXiv ID: 2406.06524 “View on arXiv” Authors: Unknown Abstract The gas fee, paid for inclusion in the blockchain, is analyzed in two parts. First, we consider how effort in terms of resources required to process and store a transaction turns into a gas limit, which, through a fee, comprised of the base and priority fee in the current version of Ethereum, is converted into the cost paid by the user. We adhere closely to the Ethereum protocol to simplify the analysis and to constrain the design choices when considering multidimensional gas. Second, we assume that the gas price is given deus ex machina by a fractional Ornstein-Uhlenbeck process and evaluate various derivatives. These contracts can, for example, mitigate gas cost volatility. The ability to price and trade forwards besides the existing spot inclusion into the blockchain could enable users to hedge against future cost fluctuations. Overall, this paper offers a comprehensive analysis of gas fee dynamics on the Ethereum blockchain, integrating supply-side constraints with demand-side modelling to enhance the predictability and stability of transaction costs. ...