Paper 2022/056

LedgerHedger: Gas Reservation for Smart-Contract Security

Abstract

In smart contract blockchain platforms such as Ethereum, users interact with the system by issuing transactions. System operators called miners or validators add those transactions to the blockchain. Users attach to each transaction a fee, which is collected by the miner who placed it in the blockchain. Miners naturally prioritize better-paying transactions. This process creates a volatile fee market due to limited throughput and fluctuating demand. The fee required to place a transaction in the future is unknown; yet, ensuring timely transaction confirmation is critical for securing smart contracts that represent billions of dollars and underpin prominent blockchain scaling solutions. We present LedgerHedger, a novel mechanism that guarantees the confirmation of a transaction within a specified time frame. Due to the absence of external enforcement in decentralized systems, LedgerHedger uses incentives. Its core is a hedging agreement between a transaction issuer and a second party, possibly a miner. The issuing party pays for the transaction upfront while the second party commits to paying any necessary fees when the transaction is issued in the future, even if they exceed the original payment. LedgerHedger gives rise to a strategic game, where the issuing party deposits the transaction payment and the committing party deposits a collateral. During the target time frame, the latter is required to confirm the transaction if it exists, or they have the option to withdraw the payment and the collateral if the transaction is not presented. We demonstrate that for a broad range of parameters, a subgame perfect equilibrium exists where both parties are incentivized to act as desired, thereby guaranteeing transaction confirmation. We implement LedgerHedger and deploy it on an Ethereum test network, showcasing its efficacy and minor overhead.