k-th (second price auction model) confusion

[novaknole]

I was reading about EIP1559 and got interested about the journey.

I was reading an article from Vitalik where he mentions the weaknesses for k-th auction.

If the gasPrices of users are as follows: "0.02, 0.03, 0.05, 0.08, 0.13, 0.19, 1.00" and miner has place for 5 transactions, then he would choose the most-right 5 transactions and make everyone pay 0.05, increasing his revenue.

Vitalik mentions the following problem.

First, a block proposer can include their own transactions in a block,
and thereby increase the clearing price, increasing their own total
revenue.

If miner has space for 5 transactions and we assume that all 5 transactions must be included, then, sure, miner will include two of his own dummy transactions priced at 0.13, causing users with(0.13, 0.19, 1.00) to pay 0.13 as well, i.e miner gained 0.13 * 3. While this is true, I don't understand why miner even needs to submit his own dummy transactions to increase the price ? he can just only include 3 most-right transactions in the block, gaining the same revenue. Why does vitalik even mention dummy transactions by miner at all ? If there was a validation upon consensus that blocks "mostly small" are rejected, then would at least understand it.

[ricmoo]

Link to the article?

Is the weakness regarding EIP-1559 or the system prior to EIP-1559?

I feel under EIP-1559 this shouldn't work because of the burn, but in pre-EIP-1559 the miners get back 100% of anything they spend, so adding a high gas price to their own transactions is free to them, but might push up the apparent auction? And with zero transparency.

Just a guess. I haven't thought thoroughly about these issues for quite some time. Things seem to just work now. :)

[novaknole]

Hi Richard. @ricmoo

Here is the article. Search exactly for the words: "a block proposer can include their own transactions..." and you will stumble upon.

Note that this is not related to EIP-1559. Folks back in the day were discussing what to implement(the first price auction we all know is flawed, so they were considering second-price auction, which vitalik mentions the 2 weaknesses). To be honest, 2nd weakness he mentions comes from the first weakness. So don't focus on 2nd weakness and you can now re-read my question again and then, it will make sense what I am asking and yes, I know that if miner includes his own txs, they don't lose anything, but why would they need to do it in the first place ? as i said, they can just only submit 3 most right tx and the revenue would be the same.

[novaknole]

Hey @ricmoo, Sorry for disturbing,

were you able to figure it out ?