How Do Competing Mining Pools Influence the Average Transaction Fee?
Competing mining pools generally drive up the average transaction fee by creating a competitive market for block space. Each pool seeks to maximize its revenue, leading them to prioritize the highest-fee transactions available.
This collective action sets the market price for confirmation speed. However, if a pool has significant market share, it could potentially manipulate fees, though this is difficult in practice due to the open nature of the mempool.
Glossar
Competing Mining Pools
Competition ⎊ Competing Mining Pools represent independent aggregations of computational power actively engaged in the probabilistic race to discover the next valid block on a Proof-of-Work blockchain.
Average Transaction Fee
Calculation ⎊ The average transaction fee represents the mean cost paid by users to process transactions on a specific blockchain network over a defined period.
Mining Pools
Pool ⎊ Cryptocurrency mining pools represent collaborative efforts where numerous miners combine their computational resources to increase the probability of solving a block and earning rewards.