Lehar / Parlour Paper

In the realm of blockchain and cryptocurrency, particularly within Bitcoin's mining and transaction selection process, several mechanisms are in place to define the capacity and operational efficiency of a block. A block is considered "full" when it has no more than an additional 2,000 weight units of capacity left for processing transactions. This determination of a block's fullness is crucial for understanding both the theoretical and practical limits of block space utilization.

The default configuration for a Bitcoin node includes a -blockreservedweight parameter set at 8,000 weight units. This parameter reserves a portion of a block's total capacity for the coinbase transaction, essential for rewarding miners. The minimum limit for this reserved capacity is set at 2,000 units, ensuring that there is always space allocated for the coinbase transaction regardless of the block's other contents. Additionally, a hardcoded value, BLOCK_FULL_ENOUGH_WEIGHT_DELTA, is fixed at 4,000 weight units. This value serves as a threshold to determine when a block is sufficiently full, discouraging the addition of new transactions to the block. These configurations suggest that, under normal circumstances where miners do not adjust the defaults for optimizing fee income, the observed free space in a block plus the coinbase transaction should approximate 8,000 weight units, aligning with empirical observations from the blockchain.

Furthermore, the concept of "priority violations" introduces another layer of complexity to transaction selection by miners. Such violations occur whenever a block includes a transaction while there are at least five transactions in the mempool with higher fees waiting to be included. This mechanism aims to prioritize transactions based on fee rate, ensuring that those offering higher fees are included first. However, the actual effectiveness and appropriateness of this scheme are debatable, especially when considering transactions that might have been accelerated through out-of-band payments yet offer lower fee rates. The analysis becomes even more complicated when considering the absolute fees versus fee rates, as larger transactions paying modest fees could be overlooked in favor of smaller transactions with higher individual fees but lower overall contribution when aggregated.

The examination of stale blocks, or orphan blocks, further complicates the understanding of miner behavior and block management strategies. A referenced study analyzing a sample of 57 stale blocks from 2016-2019 reveals limitations in the data set and the methodology used for comparison. The study's comparison of orphan blocks to a window of 8,000 blocks, which inaccurately equates to approximately two months rather than the stated four days, raises questions about the relevacy and accuracy of the conclusions drawn regarding miners' practices. The stale-blocks repository provides a broader dataset, yet the small sample size and misinterpretation of block time intervals highlight the challenges in fully understanding the dynamics of stale blocks and their implications for blockchain operation and miner strategies.