Andreas Park PRO
Professor of Finance at UofT
Paper by: Alfred Lehar and Christine Parlour
Discussion by: Andreas Park
September 27, 2020
2020 Northern Finance in anywhere but lovely Banff
\(\downarrow\) \(\downarrow\) \(\downarrow\) technological limit \(\downarrow\) \(\downarrow\) \(\downarrow\)
not used?
\(\Rightarrow\) Conclusion: miners extract rents
my thought: this is about the equilibrium capacity (Ethereum mempool isn't empty either)
along came DeFi with huge fees
\(\to\) fees do "something"
Source: https://jochen-hoenicke.de/ (also used by authors)
Study horizon
find something odd in the data
find an economic hypothesis of why it might be
\(\exist\) indications/evidence that people/firms act as model predicts?
check the code?
US Standard railroad gauge (distance between the rails) is 4 feet, 8 1/2 inches
Because that's the way they built them in England
that's the gauge used for pre-railroad tramways
the same jigs and tools that they used for building wagons, which used that wheel spacing
other wheels would break on old roads. Because that's the spacing of the old wheel ruts
The first long distance roads in Europe were built by Imperial Rome
Might it be possible that there is some mis-behaving piece of code?
#=000...
open source
open source
Open source client by Parity
https://github.com/openethereum/openethereum/blob/c49beccadcd3c60c9fd90d1393921b91598c8eb0/ethcore/src/miner/transaction_queue.rs#L252
https://github.com/openethereum/openethereum/blob/bc167a211bb5d01d6a7baa60ee7551733ddd1cc5/ethcore/src/miner/miner.rs#L418
https://github.com/V413H4V/Komodo-RPC-Library-Python/blob/42f27ffd388441df8c12e3129221e59c2a38c58e/komodo/mining.py#L82
low type's maximal willingness to bid
high type's maximal willingness to bid
high type's "preferred" bid
Comment: This idea has many assumptions about risk aversion/insurance needs, endogenous network congestion, behavioral biases etc
Comment: Collusion is very strong - maybe individual optimization?
Well-argued paper with lots of interesting tidbits of information
Careful analysis with convincing results
Some questions about the interpretation
\(\to\) answers may depend where the paper places
@financeUTM
andreas.park@rotman.utoronto.ca
slides.com/ap248
sites.google.com/site/parkandreas/
youtube.com/user/andreaspark2812/
By Andreas Park
This is the slide deck that I used for my discussion of the above paper at the 2020 Northern Finance that did not take place in Banff.