[Bitcoin-ml] Transaction mining priorities.

Steve shadders.del at gmail.com
Thu Sep 21 00:47:14 UTC 2017

On 20/09/2017 12:21 AM, Jeff Garzik via bitcoin-ml wrote:
> The miners have two notable incentives:
> 1) Maximize fee revenue
> 2) Minimize time spent creating blocks

Agree unless this is part of consensus it will only have practical 
meaning until someone decides to stop being altruistic and maximise 
revenue.  At this point the remaining miners have a competitive 
disadvantage and if margins are tight enough they may have no choice but 
to adopt the same behavior.

Thinking ahead to a time where archival nodes are rare and UTXO only 
nodes are common I wonder if there's a case for the block size limit to 
be redefined in terms of the block's net effect on the size of the 
UTXO.  That is, there is no actual hard limit on the size of the block 
itself.  Only on the growth in UTXO that results from the transactions 
it contains.

Growth effect on the UTXO for a TX is approximately proportional to 
number of outputs - number of inputs.  So a consolidating transaction 
that spends many inputs to few outputs may actually have a negative cost 
to the UTXO size. The opposite being a UTXO growing transaction that 
creates more outputs than it has inputs.

This creates an incentive for miners to include consolidating 
transactions (which are good for the overall health of the UTXO) for no 
fee because including them creates more space for growing transactions 
which do come with fees.

I haven't thought it through in any detail.  I'm sure there's a whole 
range of issues to be considered around it. But short of 'the miner gets 
to save some disk space' I can't think of any other economic incentives 
for miners to offer a free 'cleanup service'.

Since we are already talking about things that are in the realm of a 
hard fork.  An alternative would be simply reserve a fixed percentage of 
the block space (for arguments sake say 10-20%) that is only allowed to 
contain consolidating transactions.  Since this class of transactions 
only has to compete with other consolidating transactions for block 
space likely the fee/byte would be a lot lower and incentivize both 
miners and users to keep the UTXO set as tidy as possible.

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