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Strategic Users in a Priority Queue with Bulk Service on Blockchains

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  • Donghwa Seo
  • Kyoung-Kuk Kim

Abstract

This paper analyzes transaction fees on blockchains by considering that they form a priority queue and users play a queueing game. Using an M/G^K/1 priority queue model, we provide new insights into the dynamics governing transaction fees and their impact on user behavior. We derive semi-closed form expressions for steady-state quantities and extend the relationship between user delay costs and transaction fees to general block generation times. We apply the model to the Bitcoin network and simulate user responses under various scenarios. Cross-chain analysis across Bitcoin, Dogecoin, and Litecoin reveals similarities in normalized cost structures.

Suggested Citation

  • Donghwa Seo & Kyoung-Kuk Kim, 2026. "Strategic Users in a Priority Queue with Bulk Service on Blockchains," Papers 2606.01274, arXiv.org.
    • Handle: RePEc:arx:papers:2606.01274
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    References listed on IDEAS

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    1. Nicolas Houy, 2014. "The economics of Bitcoin transaction fees," Working Papers halshs-00951358, HAL.
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    3. Easley, David & O'Hara, Maureen & Basu, Soumya, 2019. "From mining to markets: The evolution of bitcoin transaction fees," Journal of Financial Economics, Elsevier, vol. 134(1), pages 91-109.
    4. Gur Huberman & Jacob D Leshno & Ciamac Moallemi, 2021. "Monopoly without a Monopolist: An Economic Analysis of the Bitcoin Payment System," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(6), pages 3011-3040.
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