Mempool (Transaction Pool)

Bitcoin's mempool is a global, public, and permissionless pool of unconfirmed UTXO-based transactions. Nodes maintain their own view, leading to slight variations. Key characteristics include:

• Replace-By-Fee (RBF): Allows a sender to replace a stuck transaction by broadcasting a new one with a higher fee.
• Child-Pays-For-Parent (CPFP): Enables a dependent transaction to pay a fee high enough to get both itself and its parent mined.
• Strict validation rules and a focus on network-wide consensus.

Ethereum's transaction pool handles account-based transactions with nonces to enforce order. Its design is more complex due to smart contract interactions and gas. Key features:

• Gas Price Auction: Transactions compete primarily on maxPriorityFeePerGas and maxFeePerGas.
• Local vs. Global Pools: Nodes have a local pool (for own txs) and a global pool (from peers).
• Flashbots & MEV: The rise of Maximal Extractable Value (MEV) led to private transaction pools (like Flashbots) that bypass the public mempool to prevent front-running.

Solana's architecture aims to minimize mempool latency. Instead of a global pool, it uses Gulf Stream to forward transactions to validators ahead of time.

• Transaction Forwarding: Transactions are pushed to the leader (current block producer) and the next few leaders in the schedule.
• Reduced Mempool Time: The goal is for transactions to reside in network memory for seconds, not minutes.
• Localized Pools: Each validator maintains its own queue, optimizing for the high-throughput, block-based design.

The Cosmos SDK treats the mempool as a pluggable module, allowing chains to choose an implementation that fits their needs.

• Default FIFO (First-In-First-Out): A simple, non-prioritized queue.
• Priority Nonce Mempool: The standard for most chains; orders transactions by sender nonce, with a fee-based priority for the first tx from each sender.
• Custom Implementations: Chains can build their own, enabling features like packing (grouping txs) or Auction models for block space.

To combat MEV extraction and front-running, ecosystems have developed private transaction channels.

• Flashbots SUAVE: A decentralized block-building network that separates transaction inclusion from execution.
• Ethereum PBS (Proposer-Builder Separation): A protocol-level design where specialized builders create blocks and validators simply propose them.
• Cosmos "Slinky": A pre-confirmation service that allows users to get instant, enforceable guarantees from validators before a tx hits the public chain.

Mempool dynamics are directly shaped by the underlying fee market mechanism. Ethereum's EIP-1559 fundamentally changed its mempool economics:

• Base Fee: A protocol-calculated, burned fee that adjusts per block based on congestion.
• Priority Tip: A separate tip (maxPriorityFeePerGas) paid to the validator.
• Impact: Creates more predictable base fees and reduces the "first-price auction" volatility in the mempool. Other chains implement variations like Bitcoin's RBF or Solana's priority fees to manage congestion.

Attackers flood the mempool with low-fee, computationally heavy, or invalid transactions to:

• Increase network congestion and gas prices for legitimate users.
• Bloat the mempool size, causing node memory issues and potential crashes.
• Create dust transactions to obscure surveillance. Networks mitigate this with minimum gas prices, transaction expiration times, and DoS-resistant client implementations that prioritize transaction validation.

An attacker intercepts a raw transaction from the mempool and rebroadcasts it, potentially altering its signature (malleability) or sending it to another chain (replay). This can lead to:

• Double-spending if the original transaction is delayed.
• Funds being stolen on a forked chain.
• Invalidated transaction IDs causing confusion. Solutions include using unique chain IDs (EIP-155) and ensuring cryptographic signature non-malleability.

The public visibility of transaction timing in the mempool leaks sensitive information. Attackers can:

• Link addresses by observing transaction submission patterns.
• Infer private actions, like an impending large trade or governance vote.
• Perform Deanonymization by correlating transaction broadcasts with real-world events. This is a fundamental privacy limitation of public mempools, addressed by private transaction pools and zk-SNARKs for transaction hiding.

An attacker isolates a specific node by monopolizing its peer connections, feeding it a manipulated view of the mempool. This allows:

• Censorship of transactions from the victim node.
• Tricking the node into accepting invalid double-spends.
• Preparing for a longer-range 51% attack. Node defenses include maintaining a diverse set of peer connections, using inbound connection authentication, and monitoring for anomalous network behavior.

A fee paid by a user to compensate network validators for processing their transaction. In a mempool, transactions with higher fees are typically prioritized for inclusion in the next block. This creates a fee market where users bid for block space.

• Purpose: Incentivizes miners/validators and prevents spam.
• Market Dynamics: Fees fluctuate based on network congestion and demand for block space.
• Fee Estimation: Wallets analyze the mempool to suggest optimal fees for timely confirmation.

The process by which a newly mined or validated block is transmitted across the peer-to-peer network. When a block is propagated, all transactions within it are removed from each node's local mempool.

• Network Latency: Slow propagation can lead to temporary chain forks (orphaned blocks).
• Mempool Synchronization: Nodes constantly share unconfirmed transactions to keep their mempools updated, which is a separate process from block propagation.

A protocol feature that allows a sender to replace a stuck, low-fee transaction in the mempool by broadcasting a new version with a higher fee. This is a deliberate policy for transaction malleability.

• Use Case: Accelerating a transaction that is not confirming.
• Implementation: Not all blockchains or nodes support RBF; it requires signaling in the original transaction (e.g., Bitcoin's BIP 125).
• Alternative: Some networks use mechanisms like transaction expiration.

The exploitation of the mempool's visibility for profit. Frontrunning involves seeing a pending transaction (e.g., a large trade) and placing one's own transaction ahead of it. Maximal Extractable Value (MEV) is the broader concept of extracting value from block production beyond standard block rewards.

• Methods: Includes sandwich attacks, arbitrage, and liquidation bots.
• Impact: Can lead to worse prices for regular users and network congestion.
• Solutions: Private transaction relays, encrypted mempools, and fair sequencing services.

The specific software (client) a network participant runs to maintain the blockchain. Different node implementations (e.g., Geth, Erigon for Ethereum; Bitcoin Core, Knots for Bitcoin) have distinct mempool management policies.

• Policy Differences: Can include minimum fee requirements, maximum mempool size, and rules for transaction replacement.
• Consequence: A transaction may be accepted into one node's mempool but rejected by another's, affecting its propagation.

A transaction that has been broadcast to the network and resides in the mempool but has not yet been included in a validated block. Its state is provisional.

• Key Characteristics: Can be dropped by nodes if fees are too low or if a double-spend is detected.
• Lifecycle: Moves from 'pending' to either 'confirmed' (in a block) or 'failed/dropped'.
• User Experience: Wallets typically show these as 'pending' with an estimated confirmation time.