bitcoin-dev

Libre Relay v27.1 released with lower 1.25x replacement threshold

Libre Relay v27.1 released with lower 1.25x replacement threshold

Original Postby Peter Todd

Posted on: June 20, 2024 22:33 UTC

The process of Replace-By-Fee (RBF) and its implications on Bitcoin transactions are illustrated through a real-world example involving a transaction created by someone's Lightning Network (LN) node.

The incident highlights a situation where RBF was utilized to resolve a pinning issue, showcasing the efficiency of this mechanism in the context of blockchain transactions. Specifically, a transaction identified as "26aa" managed to spend three anchor outputs in a new transaction with a higher fee rate of 13.1 sat/vB, effectively replacing a previously broadcast transaction "2bbc" that had a lower fee rate of 5.37 sat/vB. This replacement is noteworthy because, despite "26aa" offering a lower total fee, it was preferred by miners due to its higher fee rate, aligning with the economic incentives of mining.

This example undermines the argument against RBF based on the notion of "free-relay," as it demonstrates that even with a significant number of nodes not supporting RBF, a transaction utilizing it can still be efficiently propagated and mined. Specifically, the transaction "2bbc" was widely disseminated across the network, consuming bandwidth without being profitable for miners due to its low fee rate. In contrast, the successful propagation and mining of "26aa" illustrate how a relatively small number of RBF-supporting nodes can facilitate the resolution of such pinning issues effectively.

Furthermore, the involvement of F2Pool, a mining pool, in mining the "26aa" transaction despite not running RBF itself, emphasizes the natural process by which transactions are selected by miners based on profitability and network policies. The Bitcoin Core's default behavior to allow transactions to expire after two weeks also plays a role in this process, highlighting the underlying mechanisms that support transaction finality and replacement in the Bitcoin network. For more detailed insights into the technical aspects and implications of RBF, interested readers can explore additional resources provided by experts in the field, such as Peter Todd's work.