Txtail: A Practical Transaction Relay Incentive Scheme for Bitcoin

Abstract

Transaction propagation delay limits the block interval and is one of the main bottlenecks in improving Bitcoin throughput. However, transaction relay in Bitcoin is entirely voluntary, which results in low bandwidth and high transaction propagation delay. Improving relay motivation by introducing incentives can effectively reduce delay, but it still faces challenges such as Sybil attacks during reward allocation, leakage of network layer privacy, and high on-chain/off-chain overhead. Therefore, this paper proposes Txtail, a practical transaction relay incentive scheme for Bitcoin, based on continuously attaching relay evidence representing the relays’ identity and contribution during transaction propagation. We employ a free pricing mechanism based on the game between relays to allocate rewards fairly. We design an order-insensitive relay evidence structure based on aggregate signatures and public key mapping, which reduces off-chain data overhead while alleviating the leakage of relay paths by obfuscating the relay order. We construct a verifiable lottery mechanism based on Merkle tree commitments to reduce the data that needs to be uploaded to the chain. Both theoretical and experimental results show that Txtail reduces the per-hop off-chain overhead and the overall on-chain overhead by 96.6% and 79.8%, respectively, compared with state-of-the-art baselines, while remaining practical for deployment.