So, OP, in your scenario, you have 1 transaction in the mempool, A, then you want to spend the change before confirmation, so you broadcast a new transaction, B, which replaces A.

> Because the size of the merged transaction is smaller than the original transactions, unless there is a considerable feerate bump, this rule isn't possible to observe.

I'm confused, the mempool only sees 1 transaction at a time, first A, then later B. " the original transactions", plural, should not exist in the mempool.

B's fee and rate needs to be larger than A's, but B will be greater than or equal to A anyway. So, just increasing the fee rate will cause a larger fee anyway.

Am I missing something?


On Wed, Jan 24, 2018 at 3:44 AM, Peter Todd via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
On Tue, Jan 23, 2018 at 10:49:34PM +0000, Gregory Maxwell via bitcoin-dev wrote:
> On Tue, Jan 23, 2018 at 10:19 PM, Rhavar via bitcoin-dev
> <bitcoin-dev@lists.linuxfoundation.org> wrote:
> > Interesting. I didn't think about this before, but it seems like bip125 is
> > rather incentive incompatible right now? If we're assuming a competitive
> > mempool, it really doesn't seem generally rational to accept a replacement
> > transaction of a lower fee rate.
>
> BIP125 replacement requires that the fee rate increases.  The text of
> the BIP document is written in a confusing way that doesn't make this
> clear.

In fact I considered only requiring an increase in fee rate, based on the
theory that if absolute fee went down, the transaction must be smaller and thus
miners could overall earn more from the additional transactions they could fit
into their block. But to do that properly requires considering whether or not
that's actually true in the particular state the mempool as a whole happens to
be in, so I ditched that idea early on for the much simpler criteria of both a
feerate and absolute fee increase.

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