Mempool Incentive Compatibility

Mempool Incentive Compatibility

Original Postby rustyrussell

Posted on: March 7, 2024 02:53 UTC

The discussion revolves around the complexities of Bitcoin transactions, specifically focusing on how an attacker could potentially disrupt the network by relaying a substantial amount of transaction data that conflicts with inputs from several transactions.

The transaction size calculator suggests that about 45k vbytes of conflicting transaction data could displace 780 transactions if the attacking transaction offers a fee rate of 40 sats/vbyte, costing approximately 1.8 million satoshis in total. This scenario highlights the vulnerability of unconfirmed transactions and the challenges in protecting them against denial-of-service (DoS) attacks.

The conversation further delves into the intricacies of miner incentives and the Replace-by-Fee (RBF) policy, which allows transactions to be replaced in the mempool if a new transaction with a higher fee is submitted. This policy is examined under the assumption that the mempool is always full, suggesting that any transaction can eventually be replaced by another offering a slightly higher fee rate. The analysis uses real-world data to illustrate how miners might evaluate such transactions, emphasizing the delicate balance between fee rates and the likelihood of a transaction being mined.

A critical point of discussion is the potential conflict between miner incentives and the current RBF rules designed to mitigate DoS attacks. By comparing the economics of replacing transactions in different positions within the mempool, it becomes evident that the existing framework may not adequately align with miners' financial motivations. This misalignment could inadvertently facilitate pinning attacks, where attackers exploit the RBF policy to hinder or prevent specific transactions from being confirmed.

Overall, the dialogue sheds light on the nuanced relationship between transaction fees, miner incentives, and network security mechanisms like RBF. It underscores the need for a more refined approach to managing transaction replacements in the mempool, one that considers both the economic incentives of miners and the overarching goal of safeguarding the network against malicious activities.