Yes, that’s right, this attack is increasingly profitable with decreasing BASE_FEE_MAX_CHANGE_DENOMINATOR, so it should be possible to mitigate the problem with a high enough denominator, however that doesn’t come without disadvantages because it would also make the base fee less responsive to changes in demand and cause it to revert more frequently to a first-price auction of miner tips.
Hm. Removing the block size limit would make this attack massively more profitable since it would allow the adversary to batch up an arbitrarily large window of transactions without paying any price for it. We should definitely be very careful about that.
Incidentally I’m also of the opinion that gas tokens do more harm than good, but I don’t think that the parallelism between them and this attack of EIP-1559 goes very far, on the one hand because all gas tokens I’m aware of have some significant inefficiency, so the user always pays some non-negligible price for shifting some gas liquidity from block M to N, while this attack can transfer gas liquidity from block N+1 to N without incurring an increase in its total gas usage. On the other hand because the user of a gas token still needs to compete for space in both blocks M and N (and this is the crucial advantage of not having a delayed gas price computation), so they would incur some substantial slippage if the amount of liquidity they’re trying to displace is anywhere close to a full block worth of gas, while by taking advantage of this attack they would be able to hoard up to ~12.5M gas per block at constant price that only the transactions from future blocks will have to pay a penalty for (or an unlimited amount of gas if the block size limit is removed as you were saying ). The other critical difference is that to my knowledge gas tokens don’t lead to long-term state growth beyond the expected bounds, while this attack almost certainly would due to the path-dependence you describe (which, yes, would be fixed by EIP-3416).
Because of these differences I had the impression that gas tokens could be more of an aggravating circumstance rather than a simulation of this attack: Imagine a mining pool trying to recoup some of the revenue lost to EIP-1559 by taking advantage of any oscillations of the base fee and sending a block double-full with gas tokenization transactions anytime the base fee is particularly low. Then they could resell these tokens at a profit whenever the base fee climbs back up and overshoots the average market-clearing price without causing their users the inconvenience of having to wait for the base fee to come down again. While doing this they would constructively interfere with the base fee oscillation they’d simultaneously be profiting off – And the greater the amplitude of this oscillation the greater their profits and the lower the usability of this proposal to the non-strategic user naïf enough to send a transaction with their “honest” marginal utility specified as max fee per gas…
That’s fair. I agree that this is a serious problem, it’s unfortunate that it hasn’t gotten more attention so far buried behind a wall of comments.