In the previous Mempool article, I experienced the dynamics of transaction propagation when different nodes on the network run different MEMPOOL relay strategies. In this post, I will look at the dynamics of private mempools, as well as the impact on public mempools, mining incentives, and the health of the Bitcoin network.
At the heart of Mempool’s purpose is to promote consistent incentives for two different political parties, miners and transaction users. The user wants to make a transaction and is willing to pay the transaction fee of the miner in order to do so. Miners want to make money, and transaction fees are other sources of income besides subsidies for new coin per block and are also the necessary main source of income for long-term cultivation as subsidies decrease.
Bitcoin is a system secured by incentives. This core dynamic is the reason you have a customer and a provider, both of whom are trying to meet their needs and needs is the method of ensuring the blockchain continues to tick forward with a sufficient amount of thermodynamic security.
Attempts to introduce friction into such a promotion mechanism ultimately did not take any action at all to change the incentives of both parties. Users who want to make a transaction still want to make a transaction and pay for it. Miners willing to accept such transactions will still accept them and charge fees by including the fees in one block.
If the deal works, then the two parties will still have their unmet needs and needs and there will still be a strong incentive to meet them in some form or way.
Miner API
A single end user is not necessarily capitalized enough or competent enough to introduce artificial friction between the two ends of demand, but miners definitely are. As the old motto, “If you build it, they will come.”
The miner’s discount situation is obviously to obtain fees in transactions in band bands through public Mempool. It requires them to provide them with the lowest overhead fees, just run the standard Bitcoin client, which is a very resilient propagation mechanism that ensures very high reliability when miners get the highest fees to pay transactions, and they don’t have to do anything. Just download the customer and run it.
However, in very hostile environments, such as the extensive network’s efforts to filter out valid transactions throughout the network’s spread, traditional assumptions can be challenged.
In this case, miners have all the motivation to establish out-of-band mechanisms to accept transactions that cannot be properly relayed throughout the network. Marathon’s Slipstream API for non-standard transactions is not the only example. In fact, many mining pools have widely implemented long precedents compared to ten years ago and still exist today. Trading accelerator.
Now we live in an all-RBF world where any transaction can be charged regardless of the historical “option-in” sign. Any node that has been upgraded to full RBF will pass any transaction that is spending unproven output in Mempool, as long as it pays a higher fee. Not always. Historically, only transactions originally made with logos can be opted into RBF and can be replaced and expected to spread across the network.
Transaction accelerators are created by miners to facilitate the behavior of this behavior and are used for transactions that do not choose to use RBF.
Third-party API
The overhead for miners or pools to create their own transaction commit API is not high, but it is not free. It still requires at least one developer and time to complete the design and release cycle of any software. The curve is not particularly exaggerated, but it still prefers smaller miners for smaller miners in terms of the resources they are going to invest in such efforts.
Mempool.space has proven that for third parties that have no miner-related to create such APIs, it is a viable effort to enable miners to simply connect them to their services rather than spending the effort to create themselves from scratch. However, there is a problem with such third parties, such as this kind of service will not be established and operated for free. They will want to lay off employees.
This dynamic can be done in two ways, either these services ultimately require higher costs so that both miners and service providers can earn income, or miners must share smaller revenue cuts to enable such services to remain competitive with services operated by direct miners. This means that using a third-party submission API instead of your own miner earns less than miners than running your own API.
Private order flow
When it comes to overall system incentives, reliability of end-user software, and a layer 2 security model that relies on using pre-signed transactional and reactive security models, the above possibilities introduce serious problems, perhaps even the security model of the second-tier system to ensure user funds are secure.
When a transaction is submitted to a private API, the network participant is not actually visible until it is actually confirmed in a block. The entire queue of unconfirmed transactions using these systems is opaque. Operators of these APIs can make it public, but not in a trustless manner. There is no way to prove or guarantee that the operator will not withhold information.
Withholding transactions from a public perspective can distort users’ charge estimates and even open the door to the possibility of manipulating these Felts by filling blocks with their own transactions. Transactions used in the operation of the second-tier system can be detained from the public’s perspective until confirmation, which may delay the user’s ability to deals that must respond to, ensuring the security of their funds.
Finally, if the demand or demand for them is high enough, then only such an API is a huge concentration pressure. Having to deal with connecting to each API to submit a transaction is troublesome, poor UX and potential backend complexity. This tends to enhance the use of the largest API, ignoring the tail, resulting in a feedback loop.
Hashrat’s largest API operator will have the fastest and most reliable confirmation, only those largest miners can reliably earn this extra income, thus giving them more capital to grow larger income, and so on.
Parallel memorandum
Spectrum, on the other hand, is the possibility to establish a completely independent public relay network. While this does replicate the current openness of the existing public mempool and avoids the most severe pressures in the centralized pressure of the central API, it is still not ideal.
There are multiple Mempools that introduce complexity for miners, end users and end users applications. Now users need to track all separate MEMPOOLs, especially those used for systems that interact with the main relay network, in order to have unconfirmed transactions.
If Lightning (or other layer 2) starts using parallel mempool, tracking it is crucial for any Lightning (or other layer 2) users. It is also necessary to track all In a parallel relay network, you can view other unproven transactions accurately, which you want to bid to include in the next block. In any user fee estimate, tracking only one subset will result in a potential error gap.
You just make things worse
Try to prevent transactions willing to pay for users without having to resolve them at a consensus level. Bitcoin is an incentive-driven engine that will facilitate in one form or another when incentives from multiple parties remain consistent.
Trying to pretend that this is not the case and that things that can be prevented, distrust, or otherwise procrastinated are fools’ errands. Not only that, but trying on any serious scale will have very serious negative consequences, except doomed to fail.
Bitcoin’s consensus rules are the framework for initiating incentives. The only thing that can outperform incentives is changing the framework. Literally, this is the reason for informing and shaping incentives first.
Trying to interfere with any other layer of incentives is a fool’s errand and can only exacerbate the negative consequences driven by incentives, i.e. centralization.
