Mempool Incentive Compatibility

Mempool Incentive Compatibility

Original Postby rustyrussell

Posted on: March 19, 2024 23:19 UTC

The discussion revolves around a hypothetical scenario involving Bitcoin miners and their strategies concerning transaction confirmations and fee rates.

A proposal is made suggesting that if half of the miners agree to replace transactions that are unlikely to be confirmed in the next seven blocks with transactions offering higher fees that will confirm in the next block, it could result in increased profits. This strategy hinges on the assumption that the remaining 50% of miners would adopt a similar policy, provided the replacement transactions pay at least 0.8% of the total fees.

The debate further explores the practicality and implications of such a strategy. It's noted that the occurrence of miners collectively adopting this approach seems highly unlikely outside of deliberate strategic maneuvers rather than accidental consensus. The conversation implies that for such a strategy to be widely adopted, it must not only promise long-term profit increases but also be simple to implement.

This raises questions about the dynamics of mining policies and the balance between competitive advantage and collective action among miners. While the strategy discussed might offer theoretical benefits under certain conditions, its feasibility and real-world application appear to be limited by the complexity of coordination and the inherent risks of deliberate attacks on the network's transaction confirmation process.