Which of these will miners priorities most - LN or RBF ?

[Felicity_Tide]

Recently, I gained so much interest in learning about BIPs after creating a thread with the question "What percentage is good enough for Bitcoin improvements proposals?" https://bitcointalk.org/index.php?topic=5497333.msg64109080#msg64109080. I happened to come across lots of BIPs that are available on GitHub. A particular BIP with the title "Opt-in Full Replace-by-Fee Signaling" caught my attention, which I had to delve dip and make further research about.

Replace By Fee also known for short as RBF is a policy that enables users to replace their unconfirmed transactions with news ones with a condition of a higher transaction fee on the Bitcoin network. I was confused at first, as I doubted if this was possible. I never disagreed to the fact that transactions do experience some delay due to over crowding of the mempool, thereby resulting to pending of transactions. And I have also learnt that miners priorities transactions with higher fees than that of lower fees, but the replacement technic never came to my mind until recently.

I was eager to know how this works, and I found out that it works in two ways. Opt-in RBF and Full RBF. Opt-in requires flagging before the first transaction is done, while Full don't necessarily require. I also came across CPFP(Child pays for parents) which allows a receiver to increase the transaction fee of a pending payment that wants to be received, but it's not actually part of this post.

With my curiosity as always, I wondered how beneficial could RBF be to users making transactions, and to miners performing the validation. It turns out to be that those who make use of this technics do this to speed up their pending transactions since miners priorities transactions with a higher fee. This means they are tired of joining the crowd, and are willing to pay more than others just to be attended to. While miners get to choose transactions with higher fees over those with a lower fees.

On the day of halving, Bitcoin recorded the highest average transaction fee per transaction. Cases of congestion like this leads to tx fee hike, which gives an upper hand to those who can apply the RBF policy to get a faster transaction approval.

The entire write up in this post now boils down to when all Bitcoin has been mined, and miners starts getting their rewards only from tx fees. This fees won't be enough for most of them, as they will want more reward to cover up for their maintenance. RBF might be a solution to their problem, but LN has become part of the picture that most ethusiasts(including miners) might have not really thought of.

My Question:
1. Seeing that RBF will benefit miners more in the future, and how will they respond to the use of LN by Bitcoin users?.
2. Do you think that the rate at which miners ignore certain tx due to low tx fees would increase in the future?.
3.Do you think that RBF will be generally used in the future?.

Kindly share your opinion, and maybe also try to reason from both a user and a miner's perspective.

If you identify any form of mistake in this post, please pardon me and do well to point them out.

Link to Opt-in Full Replace-by-Fee Signaling BIP: https://github.com/bitcoin/bips/blob/master/bip-0125.mediawiki

Tutorial to learn how to perform a RBF tx: https://youtu.be/LdmoP4Ss1hU?si=b1xqCum4qUzTD3-C

The image i intended to add to the post, but I ended up removing https://www.talkimg.com/images/2024/05/26/LCxWd.jpeg

[un_rank]

My Question:
1. Seeing that RBF will benefit miners more in the future, how will they respond to the use of LN by Bitcoin users?.
2. Do you think that the rate at which miners ignore certain tx due to low tx fees would increase in the future?.
3.Do you think that RBF will be generally used in the future?.

1a. RBF does not benefit miners more. When someone replaces a transaction that is commonly because the feerate at the time is higher than what they paid for the initial transaction and theirs will not be given priority. This means there are other transactions paying higher fee that would have gotten that priority. To miners it does not matter if you use RBF or a proper tx fee when making the initial transaction.
1b. LN is an off chain protocol, so miners cannot respond to it, unless when a channel is opened and closed. I expect they will treat it as every other transaction.

2. Low transaction fees is very relative. Miners do not ignore tx due to low fees, they take the highest ones. Priority fees now is 8 sat/vbyte which is low compared to what we have been experiencing, but it would be prioritized by miners. If that drops to 2 sats/vbyte it will still get priority over those that pay less.

3. Yes.

- Jay -

[NeuroticFish]

1. Seeing that RBF will benefit miners more in the future, and how will they respond to the use of LN by Bitcoin users?.
2. Do you think that the rate at which miners ignore certain tx due to low tx fees would increase in the future?.
3.Do you think that RBF will be generally used in the future?.

1. There's no such thing as "benefit more in the future". And LN is off-chain. The only thing on-chain is the creation/closure of the channels.
2. It simply depends on how many tx with higher fees are available to get mined.
3. I expect not. I expect in the future there won't be wild fluctuations in how congested the mempool is and the fee will be - in most of the cases - better estimated from start.

I don't want to be harsh, but this post is driven by confusions, so I'll narrow down some things:
Afaik the miners don't care what is the purpose of a tx (normal transfer, or a consolidation, or a mass payment, or LN channel related, or a RBF, or even those ordinals). All those simply spend some inputs and pay a fee.
All the miners care about is the fee/vBytes of the transaction. The ones with the higher fee will be included in the mined block.

Note: there are some few exceptions, just in case you wonder:
* since not everybody have the same mempool, late transactions may be missed by miners
* in case of a CPFP the overall fee (per vB) for both transactions matters
* a miner/pool can decide to include transactions they want even if they're not the most expensive; they'll lose money with the (unless somebody has paid off-chain for the acceleration, but beware, most tx acceleration services only re-broadcast, which is not tx acceleration)

[OcTradism]

Bitcoin miners get their income from block subsidy as block reward and transaction fees.

Transaction fees paid to miners for their works to confirm on chain transactions. RBF, CPFP are on chain transactions but Lightning Network transactions are not on chain, they are off chain. Miners don't get bitcoin from off chain transactions through Lightning Network.

They only get fee by on chain transactions to open Lightning Network channels, after that no more fee from off chain LN transactions.

[Cricktor]

They only get fee by on chain transactions to open Lightning Network channels, after that no more fee from off chain LN transactions.

Opening and closing of LN channels require on-chain transactions and thus transaction fees for those has to be paid under normal circumstances. To my knowledge atomic swap-ins and swap-outs to change balance of existing LN channels would be another case that requires on-chain transactions with transaction fees.

What I don't understand is why OP brings up LN in the context of the main topic of opt-in RBF and Full RBF.

Miners don't need to care about RBF, except for Full RBF as long as it has to be enabled. Full RBF is essentially a permitted double spending under certain conditions, only that the older unconfirmed and replaced transactions that pay a lower fee become replaced by the newest transaction paying higher fees.

Question 2 is sort of under the wrong assumption that miners ignore low fee transactions or would ignore them at a higher rate in the future. No, they don't do this and won't in the future. They just prioritize transactions from higher to lower fees as this maximizes their profit per block now and in the future.

Regarding 3, I expect that Full RBF becomes a default and no option anymore. I'm not particularly happy with this as for me opt-in RBF is sufficient. For miners Full RBF is simply a convenient option to allow any transaction to be replaced with one that pays higher fees. Higher fees are potentially in miner's interest.

RBF and particularly Full RBF is more of a problem for those accepting transactions as you have to wait for such transactions to be safely confirmed before sending goods or whatnot a transaction pays for.

[BlackHatCoiner]

There has been a lot of discussion in this topic, regarding Full RBF, if you're interested: https://bitcointalk.org/index.php?topic=5403730.0.

A common misconception is that Full RBF enables all unconfirmed transactions to be double-spent. In reality, all unconfirmed transactions can be double-spent, regardless of Full RBF, RBF or no-RBF. If it was possible to ensure the security of 0-conf against double-spending, there would be no need for a blockchain, and all transactions wouldn't have confirmations. Full RBF simply formalizes what is already evident.

[Cricktor]

I might have flaws in my understanding of how Bitcoin works, any corrections are welcome! This is how I understand it. (I will have a look at the thread you pointed to...)

Let's ignore RBF at first completely.
If we have an unconfirmed transaction spending UTXO1, then a newer transaction spending this UTXO1 has to be considered invalid by nodes and dropped immediately and not propagated further. Therefore you couldn't update or change your initial transaction for whatever reason once it was broadcasted and in other node's mempool (your transaction might be dropped after an individual expiry period from other mempools, standard is 14d unless the transaction is rebroadcasted by someone).

Opt-in RBF flagged in a transaction:
the transaction has RBF enabled, thus signaling other nodes that have this transaction already in their mempool that an appropriate double spending replacement transaction is permitted and should be accepted if it meets RBF requirements like paying a higher fee than the to be replaced transaction and opt-in flag for permitted RBF.
If the originial transaction didn't have RBF enabled (assuming no Full RBF active) then any replacement transaction should've been dropped as invalid.

Full RBF active/enabled:
no need for RBF flag in the transaction; any new transaction can spend the initial UTXO(s) with a newer transaction paying higher transaction fee, replacing older unconfirmed transactions.