Documenting the lifetime of a transaction during mempool congestion from the perspective of a rational user [combined summary]

• Documenting the lifetime of a transaction during mempool congestion from the perspective of a rational user Billy Tetrud 2022-02-26 05:35:51+00:00
• Documenting the lifetime of a transaction during mempool congestion from the perspective of a rational user Jeremy 2022-01-13 21:06:37+00:00

Published on: 2022-02-26T05:35:51+00:00

Summary:

In this email, Jeremy Rubin discusses existing wallet behaviors and user preferences in Bitcoin, focusing on rational wallet behavior. The author argues that rational wallets should prioritize spending untrusted outputs to guarantee payment, free of cost, by using Child Pays For Parent (CPFP) mechanism to push transactions to the top of the mempool. Wallets should also track replaced payments and prevent double-spending.The author emphasizes the importance of clear messaging around transaction finalization to solve problems more easily. They also mention the significance of saving all ancestors and descendants of transactions to maximize balance and receive "free" CPFP subsidies. Wallet agents are advised to retransmit transactions if they believe other nodes are not aware of them and they are likely to go into a block.Certain wallets, like Lightning Channels, already have some of this functionality built-in. However, congestion control using Check Transaction Verify (CTV) does not complicate wallet behavior but rather helps solve existing problems by reducing the need for rational behavior like CPFP bumping. In a full mempool scenario, exchanges that batch transactions can confirm a constant-sized root transaction, and sub-trees of transactions locked in by CTV can be treated as fully trusted. This reduces the need for CPFP bumping and exerts back pressure on transaction urgency.The email primarily focuses on existing wallet behaviors and user preferences, rather than on CTV. The author defines rational wallet behavior as maximizing fully trusted balance, processing payments within the urgency budget, and maximizing privacy. It is suggested that rational wallet behavior may require additional metadata, such as trust scores or recent hashrate data.Overall, the email highlights the rational behaviors for wallets in various payment scenarios and discusses the reasons why some of these behaviors are not currently implemented. The author suggests that with the development of a more robust fee market, rational behaviors will likely become emergent among all Bitcoin wallets. Finally, the author addresses the relevance of CTV congestion control in solving existing wallet architecture problems, arguing that it can help reduce the need for rational behaviors like CPFP bumping and improve time-preference in on-chain resolution.

Updated on: 2023-08-02T05:23:10.793023+00:00