Mempool Incentive Compatibility

Mempool Incentive Compatibility

Original Postby instagibbs

Posted on: February 26, 2024 15:09 UTC

Version 3 (V3) introduces a noteworthy approach to handling transaction fees, particularly in the context of Child Pays for Parent (CPFP) strategies.

However, its utility extends beyond this singular application. While it might not address all the nuances associated with single transaction exogenous fees, V3 offers significant advantages for various fee-related scenarios. The mechanism is designed to respond dynamically to fluctuations in network fees. Specifically, when a transaction is evicted due to high fees, V3 aims to facilitate subsequent transactions by adjusting the minimum fee on an incremental basis. This strategy resembles the concept of a "Free Relay," where transactions that have remained in the mempool for an extended period, such as two weeks, are processed without additional costs.

The limitations of V3 are acknowledged, especially in comparison to direct fee harvesting methods. Its effectiveness is constrained both in terms of scope and duration, making it a partial solution to the broader challenges of transaction fee management within the network. Despite these constraints, V3's introduction marks a step towards more adaptive and nuanced fee strategies, offering users potential relief in certain scenarios where network congestion leads to transaction eviction.