Transaction Inclusion

The mempool (memory pool) is a node's temporary holding area for unconfirmed transactions broadcast to the network. It functions as a publicly visible queue where transactions await selection by a block producer. Key characteristics include:

• Dynamic State: Its size and composition change constantly as transactions arrive and are confirmed.
• Local View: Each node maintains its own version, leading to slight variations across the network.
• Fee Market: Transactions compete for inclusion based on their attached gas fee or transaction fee.

Block producers (miners or validators) prioritize transactions that maximize their revenue, creating a fee market. Users bid for faster inclusion by attaching higher fees.

• Gas Price (EVM): The price per unit of computational work (gas) a user is willing to pay.
• Priority Fee (EIP-1559): A tip paid directly to the block producer on top of a base fee that is burned.
• Fee Estimation: Wallets use mempool data to suggest optimal fees, balancing cost against inclusion speed.

The entity responsible for constructing the next block determines which transactions are included. The mechanism varies by consensus:

• Proof of Work (PoW): The first miner to solve the cryptographic puzzle gets to propose the block, selecting transactions from their mempool.
• Proof of Stake (PoS): A pseudo-randomly chosen validator is assigned the role of block proposer for a specific slot.
• MEV (Maximal Extractable Value): Proposers may reorder, include, or exclude transactions to capture additional value beyond standard fees.

Physical constraints on each block directly limit inclusion capacity.

• Block Gas Limit (EVM): The maximum total amount of gas all transactions in a block can consume. This caps computational complexity.
• Block Size (Bytes): In networks like Bitcoin, a maximum size in bytes limits the number of transactions based on their data size.
• Dynamic Adjustment: These limits can be adjusted through network governance or protocol rules (e.g., Ethereum's gas limit is voted on by miners/validators).

A mechanism allowing a user to replace an unconfirmed transaction in the mempool with a new one that has a higher fee. This is critical for:

• Accelerating Stuck TXs: Bumping the fee to incentivize inclusion.
• Correcting Errors: Fixing incorrect recipient addresses or amounts before confirmation.
• Implementation: Must be explicitly signaled in the original transaction (e.g., Bitcoin's RBF, Ethereum's same-nonce replacement). Not all networks or wallets support it.

The point at which an included transaction is considered irreversible.

• Probabilistic Finality (e.g., Bitcoin PoW): Inclusion deepens with each subsequent block, making reversal exponentially harder and more costly.
• Economic Finality (e.g., Ethereum PoS): After a checkpointing process (2/3 of stake attesting), the transaction is finalized. Reversal would require slashing at least 1/3 of the total staked ETH.
• Instant Finality (e.g., Tendermint BFT): Once a block is committed by a supermajority of validators in a round, it is immediately final.

The mempool (memory pool) is a node's temporary holding area for unconfirmed transactions broadcast to the network. It acts as a pending transaction queue where valid transactions wait to be selected by a validator or miner for inclusion in the next block. Nodes maintain their own mempools, which can differ based on network propagation delays and local policy filters.

Transaction fees (often measured in gas price or fee rate) are the primary economic mechanism for prioritizing inclusion. Validators are incentivized to include transactions offering the highest fee per unit of block space to maximize their rewards. Users engage in a fee market, bidding for limited block space. Transactions with insufficient fees may experience delays or never be included.

MEV is the profit validators or sophisticated bots can extract by strategically ordering, including, or excluding transactions within a block beyond standard block rewards and fees. Common forms include:

• Front-running: Placing a transaction ahead of a known pending trade.
• Back-running: Placing a transaction immediately after.
• Arbitrage: Profiting from price differences across DEXs. MEV creates centralization pressures and can degrade user experience.

A core security property where no single entity can prevent a valid transaction from eventual inclusion. Permissionless networks achieve this through decentralized validator sets. Threats include:

• Regulatory pressure on centralized block builders.
• MEV-driven exclusion where bots censor transactions to protect their strategies.
• Protocol-level filters (e.g., OFAC compliance). Solutions like commit-reveal schemes and encrypted mempools are being researched to enhance censorship resistance.

Each block has a finite capacity, defined by a block gas limit (Ethereum) or block weight (Bitcoin). This creates block space scarcity, directly fueling the fee market. Key considerations:

• Throughput vs. Decentralization: Larger blocks increase throughput but raise hardware requirements for nodes, potentially harming decentralization.
• Spam Protection: Limits prevent denial-of-service attacks via cheap, computationally heavy transactions.
• Dynamic Adjustment: Some protocols allow limits to adjust based on network demand.

Replace-by-Fee (RBF) is a protocol rule allowing a sender to replace a stuck, low-fee transaction by broadcasting a new version with a higher fee, signaling miners to drop the original. Package Relay (e.g., Ethereum's eth_sendRawTransactionConditional) allows transactions to specify dependencies, ensuring a set of transactions is included atomically or not at all. These are mempool policies that improve user control and enable complex transaction strategies.