Temporal Liquidity Crossing for Blockchains: An EIP-1559 Extension for Admission Below the Base Fee

arXiv:2610.30595 · cs.GT, cs.CR, cs.DC · Submitted 2026-10-22 · Read on arXiv

Listen

Transcript

Introduction to the show: ident: Security Radio. Generated commentary on the latest security and cryptography papers.

Nadia: We're looking at the paper: "Temporal Liquidity Crossing for Blockchains".

Elias: Here's the gist of the paper. The gist The introduction introduces temporal liquidity markets (TLM), a framework that allows transactions seeking early-region execution to fund those opting into exclusion from that region, thereby creating a self-funded mechanism for crossing complementary temporal requirements Temporal Liquidity Crossing Framework The paper introduces Temporal Liquidity (TL) as "the economically relevant capacity to move execution across admissible positions without violating feasibility, together with the value gained or surrendered by that movement" This framework is applied to Ethereum through a "Temporal Crossing Mechanism for EIP-1559" where consumers sign a positive temporal authorization as their bid for earlier service, and providers' below-floor fee fields determine a shortfall which the consumer's payment covers.

Nadia: A mutually acceptable crossing exists when "∆u ≥ ∆f; strict inequality leaves positive temporal surplus".

Elias: Mechanism Implementation and Rules The mechanism involves specific rules for consumers, providers, and the builder within a block context.

Paper summary: Nadia: So, we're looking at this paper called "Temporal Liquidity Crossing for Blockchains: An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee." It sets up a framework where transactions that want to execute early can actually fund transactions that choose to run later.

Elias: Yeah, the main idea seems to be introducing temporal liquidity markets, or TLM, which lets consumers who need early execution help providers who are opting out of that early spot. It’s about crossing these different timing needs without breaking the rules of Ethereum's EIP-one thousand five hundred fifty-nine fee structure.

Priya: So what makes this important for us as people looking at the data? It sounds like it tries to solve a problem where you have two conflicting goals in a transaction, and you need a way to make both happen together.

Nadia: Exactly. The authors argue that EIP-one thousand five hundred fifty-nine fee fields are just a bid, they don't actually guarantee an earlier spot if someone else has higher fees or if we accept something later than we hoped > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>. This paper claims that TLM allows consumers to fund providers who accept being excluded from the early region and still get admitted into the block >

Elias: It specifically talks about a mechanism where selected consumers complete within the early region, and they're ordered among themselves by authorization density, which is defined as their charged-gas divided by their gas limit > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>. That ordering is validator-checked >

Priya: So what does that mean practically? It seems like it gives consumers a way to actually influence how providers get included in a block. If I'm trying to move fast but don't want to pay the highest fee, this system lets me do something different with my payment.

Nadia: Exactly. It moves beyond just having a fee bid, which is just a guess about whether you want early or late execution. Here, consumers can sign authorizations that fund the shortfall if providers opt out of the early region but still want to be included anyway >

Elias: The paper sets up this specific mechanism where selected consumers are ordered by their authorization density, which is defined as their charged-gas divided by their gas limit. That ordering is checked by validators >

Priya: And they show that under this system, a builder—someone trying to insert transactions—can't just raise the direct fee payoff for everyone else just by adding a bunch of providers with fees. They actually prove it with an adversary model involving strategic senders and builders >

Paper summary: Nadia: It also confirms that even if you have a capped inclusion fee and a certain link ratio, no finite set of transactions inserted by the builder can raise their direct fee payoff. That’s solid for security, because it means the system stays stable against manipulative insertions >

Elias: The core finding is that this framework lets you regulate ordinary demand at its original target while still admitting these funded provider gas additions in a controlled way, creating a base-fee fixed point that keeps things balanced >

Priya: So what we’re seeing here is how time can become an input to dynamic fee design and congestion control on the blockchain. It’s about making those conflicting timing requirements into something self-funded rather than just one person winning the fee auction >

Nadia: It shows a way to keep the original allocation of gas targets while actually increasing total utilization by allowing this funded capacity. Now, we need to look at how this specific mechanism actually runs on Ethereum.

Elias: Right, so the paper focuses on defining temporal liquidity as "the economically relevant capacity to move execution across admissible positions without violating feasibility, together with the value gained or surrendered by that movement" >

Priya: So how does they define that capacity in practice? What's the actual calculation for whether a crossing is feasible?

Nadia: They define it using a two-sided temporal-liquidity crossing framework where they look at two positions, qE earlier than qL, and they define the value of moving earlier as delta k equals Vk(qE) minus Vk(qL), which must be greater than or equal to zero > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg3>

Elias: So they call the transaction seeking early execution a temporal-liquidity consumer, and the one opting out of that region a temporalliquidity provider > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg3>

Priya: What is this delta u minus delta f that they mention? How does that actually translate into a payment from the consumer to the provider?

Nadia: The consumer’s maximum temporal bid is delta u, and the provider's fee field determines a shortfall, and the consumer's payment covers that > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Elias: And there are specific rules about how these consumers sign a lump-sum temporal authorization, or TLA denominated in wei, which is different from the regular EIP-one thousand five hundred fifty-nine fee fields > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Paper summary: Priya: So how does that TLA relate to those hard floor things we have in EIP-one thousand five hundred fifty-nine like the base fee? Is it really helping control the base fee as much as they claim?

Nadia: Under TLM regulation, funding-conditioned and capacity capped provider gas is excluded from the ordinary EIP-one thousand five hundred fifty-nine controller input > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Elias: Counting that funded gas there instead raises the base fee and displaces ordinary demand at a positive base-fee fixed point > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Priya: It sounds like they are trying to preserve the original target for ordinary gas while still admitting this extra capacity, but what's the limit on how much extra capacity you can add?

Nadia: Exclusion lets the controller regulate ordinary demand at its original target and preserves the no-TLM ordinary allocation by construction > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Elias: In synthetic experiments, they show that this system raises total utilization with funded gas > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg2>

Elias: Before we wrap up, the paper does state some limitations about how they model things. They mention that TEP is an analytical description and doesn't propose encoding all of its fields in an Ethereum transaction > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg3>

Priya: What do you mean by that? Where does it stop working, or what are they not covering with this specific model?

Nadia: The paper focuses on this analytical description and doesn't propose encoding all of its fields in an Ethereum transaction > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg3>

Elias: So the mechanism is a framework, not a complete implementation detail that you just copy and paste into every single transaction > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg3>

Priya: That makes sense. So what's the real impact if we think about how this works on Ethereum? Does it really change how we think about fees as time dependent?

Nadia: It establishes a self-funded system where consumer payments cover provider shortfalls, and the surplus is burned > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg1>

Elias: The final block is valid only if its realized gas, selected sets, settlement and order agree on replay > Temporal Liquidity Crossing for Blockchains An EIP-one thousand five hundred fifty-nine Extension for Admission Below the Base Fee <ref:2610.30595#pg2>

Conclusion: Elias: Right, they’re using this Temporal Liquidity Market, or TLM framework, to connect those two things—the need for speed versus the desire for lower fees on the block.

Priya: So what does this mean practically? It seems like it gives consumers a way to actually influence how providers get included in a block.

Nadia: It also confirms that even if you have a capped inclusion fee and a certain link ratio, no finite set of transactions inserted by the builder can raise their direct fee payoff. That’s solid for security, because it means the system stays stable against manipulative insertions.

TLM Research

cs.GT, cs.CR, cs.DC

Submitted: 2026-10-22

Updated: 2026-10-22

Comments: 28 pages

License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/

Importance score: 91/100

The gist: The gist The introduction introduces temporal liquidity markets (TLM), a framework that allows transactions seeking early-region execution to fund those opting into exclusion from that region,

Key concepts

Temporal Liquidity (TL): This is the economic capacity to move execution between different time positions within a block without breaking rules. It measures both the value gained or lost when moving from an early position to a later one, allowing users to price this temporal difference.
Temporal Crossing Mechanism for EIP-1559: This is the specific implementation where consumers sign a 'lump-sum temporal authorization' (TLA) as their bid for earlier service. Providers then use their below-floor fee fields to define a shortfall, which the consumer's payment covers, establishing a mutually acceptable crossing.
Base Fee Fixed Point: This is the outcome when TLM regulation is applied. Instead of counting provider gas in the ordinary controller load, it's treated as separately funded capacity. This allows the system to maintain EIP-1559's ordinary gas target while admitting bounded, funded provider gas without displacing ordinary demand.
Consumer Authorization Density (ρi): This metric defines a consumer's priority or rank based on their charged-gas endpoint relative to the block limit. It is calculated as ci / gi, where ci is the cumulative charged gas and gi is the block gas limit, used to order selected consumers by authorization density.

Summary

The gist The introduction introduces temporal liquidity markets (TLM), a framework that allows transactions seeking early-region execution to fund those opting into exclusion from that region, thereby creating a self-funded mechanism for crossing complementary temporal requirements

Temporal Liquidity Crossing Framework

The paper introduces Temporal Liquidity (TL) as the economically relevant capacity to move execution across admissible positions without violating feasibility, together with the value gained or surrendered by that movement This framework is applied to Ethereum through a Temporal Crossing Mechanism for EIP-1559 where consumers sign a positive temporal authorization as their bid for earlier service, and providers' below-floor fee fields determine a shortfall which the consumer's payment covers. A mutually acceptable crossing exists when ∆u ≥ ∆f; strict inequality leaves positive temporal surplus.

Mechanism Implementation and Rules

The mechanism involves specific rules for consumers, providers, and the builder within a block context.

Consumers sign a lump-sum temporal authorization (TLA) denominated in wei which is distinct from EIP-1559 fee fields. A consumer's authorization density is defined as ρi = ci / gi.
The mechanism fixes a protected consumer-selection gas allowance KC = κCK, where KC has gas units, K is the block gas limit, and κC ∈ [0, 1] is the dimensionless allowance fraction.
Selected consumers receive completion within a defined early region of the block if their cumulative charged-gas endpoint is less than or equal to E.
Providers sign TLA < 0, choose a fee cap mi with νb ≤ mi < b, and accept execution outside the early region after completion of the protected consumer set.

Impact on Base Fee Control

The paper analyzes how TLM regulation affects base-fee metering compared to naïve metering.

Under naïve metering, the controller measures Gt = Ot + Pt, where provider gas is included in the controller load.
Under TLM regulation, the controller measures Gt = Ot, treating provider gas as a separately funded, capacity-capped addition.
A base-fee fixed point means bt+1 = bt > 0, which preserves EIP-1559’s ordinary gas target while admitting bounded, funded provider gas in addition.

Security and Incentive Properties

The mechanism is analyzed against an adversary model involving strategic senders and builders. The paper proves several properties under this model. Key properties include:

Property 1 (rule validity) states that every accepted block, the selected consumers complete within E in order of nonincreasing density, every funded provider starts at or after E.
Property 2 (base-fee integrity) confirms that the base fee gib of every included transaction is burned in full.
Property 3 (no subsidy) establishes that provider shortfalls are paid only from the temporal charges of the block’s selected consumers.
Property 6 (self-supply safety) shows that a builder loses at least (ν − ε)b gi on every provider it inserts, and no finite set of inserted providers raises its direct fee payoff through the consumer allowance.

Simulation Results

The simulation study compares baseline EIP-1559 with two TLM variants, T20 and T30.

Under T20 and T30, ordinary gas remains 30.03 million at a 28.54 base fee while total utilization is raised to 69.33% and 71.57% through funded provider gas.
The simulation confirms that the preserved ordinary gas and base fee follow from Lemma 2 rather than from measurement.
The results show that under T20, the allowance link does not bind in any block under T20, T30 or N, because funded provider gas exceeds KC /λ = 1 million.

The temporal liquidity market introduces a time axis to dynamic fee-market design and congestion control by allowing users to price the difference between early and later execution positions. The block-local extension provides selected consumers with early-region assurance and relative rank among selected consumers within the block, while simultaneously funding below-floor providers that accept exclusion from that region. This framework demonstrates how a bounded, consumer-funded provider allowance can retain the reference ordinary allocation and raise total utilization in the modeled setting. Against strategic senders and builders, the rules are checked by every validator, ensuring that no subsidy enters and no finite set of transactions a builder inserts raises its direct fee payoff. The analysis shows why funded provider gas should be excluded from the ordinary EIP-1559 controller because counting it raises the base fee and displaces ordinary demand. This mechanism establishes a self-funded system where consumer payments cover provider shortfalls, and the surplus is burned. The final block is valid only if its realized gas, selected sets, settlement and order agree on replay. This framework turns complementary temporal requirements into a self-funded mechanism rather than a one-sided fee bid. The paper concludes that with a capped inclusion fee and a suitable link ratio no finite set of transactions a builder inserts raises its direct fee payoff.

References

1 Babaioff, M., Nisan, N.: On the welfare of EIP-1559 with patient bidders. In: EC ’25. arXiv:2502.20031 (2025)

4 Lavee, N., Nisan, N., Pai, M., Resnick, M.: Does your blockchain need multidimensional transaction fees? arXiv:2504.15438 (2025)

6 Leonardos, S., Monnot, B., Reijsbergen, D., Skoulakis, S., Piliouras, G.: Dynamical analysis of the EIP-1559 Ethereum fee market. In: AFT ’21. arXiv:2102.10567 (2021)

8 Penna, P., Schneider, M.: Serial monopoly on blockchains with quasi-patient users. In: FC ’25. arXiv:2405.17334 (2025)

9 Reijsbergen, D., Sridhar, S., Monnot, B., Leonardos, S., Skoulakis, S., Piliouras, G.: Transaction fees on a honeymoon: Ethereum’s EIP-1559 one month later. arXiv:2110.04753 (2021)

10 Roughgarden, T.: Transaction fee mechanism design. J. ACM (2024)

17 Capponi, A., Zhu, B.: Auctioning time to mitigate latency races: theory and evidence from blockchains. SSRN (2026)

18 Franco, M., Rogozinski, G.: Mini-blocks: SSV-backed sub-slot auctions for Ethereum PBS. Ethereum Research (18 May 2026)

19 Lyu, X., Zhang, M., Zhang, X., Niu, J., Zhang, Y., Lin, Z.: An empirical study on Ethereum private transactions and the security implications. CoRR abs/2208.02858 (2022)

21 Botha, Q., Kyriacou, D., McMenamin, C., Oshitani, L., Stouka, A.-P.: SoK: preconfirmations. In: 2026 IEEE International Conference on Blockchain and Cryptocurrency (ICBC), pp. 1–19. IEEE (2026)

23 Table 1 Baseline is unmodified EIP-1559. N is naïve metering: it applies TLA while metering provider gas against the ordinary EIP-1559 target. T20 and T30 apply TLM regulation with a TLA-funded provider-gas allowance of, respectively, 20% and 30% of the hard block limit. case base fee total utilization (%) ordinary gas (million) funded provider gas (million) builder revenue million builder revenue change Baseline 28.54 (0.05) 50.05 (0.01) 30.03 (0.99) 6378m (-15.57%) N 33.78 (69,33%) 28,42m (+69,14%) T20 28.54 (69,33%) 11,57m (+10.90%) T30 28.54 (71,57%) 12,91m (+7.

Improvements for AI systems

Temporal Liquidity Market integration allows AI agents to express willingness to accept later execution by funding transactions that opt into exclusion from an early region, creating a self-funded mechanism rather than a one-sided fee bid. This enables AI systems to optimize for both early region execution (consumers) and later execution (providers) simultaneously within a single block.
The framework allows AI agents to operate under different temporal requirements by defining a Temporal Execution Profile (TEP), which describes one request's admissible positions, value over position, resource requirement, and expiry. This enables systems to model heterogeneous demand, such as latency-sensitive trading versus cost-sensitive payments.
AI systems can utilize the TLM regulation to maintain the no-TLM ordinary allocation by construction while raising total utilization through funded provider gas. This allows the system to increase its operational capacity without displacing ordinary transactions or changing their base fee structure, as seen in results where ordinary gas remains 30.03 million at a 28.54 base fee.
Agents can employ a reference-preserving admission rule that ensures every transaction of the no-TLM reference block is retained while adding providers only within residual capacity, preserving the baseline execution path for neutral transactions. This guarantees that no finite set of consumer bids or providers that the builder inserts raises its direct fee payoff.
AI systems can use declaration strategies to influence selection rank and position among selected consumers by optimizing their temporal authorization density, as a positive declaration ci is a sender-backed liability and, through ρi = ci/gi, the input to consumer selection and to relative order within the consumer subsequence.
Providers can execute below the base-fee floor when funded, provided they are outside the early region of execution. This capability allows AI providers to accept execution outside a defined early region by accepting a fee cap below the base fee, as described in Section 3.3.