How Do Transaction Size and Fee Relate to the ‘Fee Rate’?
The fee rate is the ratio of the total transaction fee to the transaction size, typically expressed in satoshis per virtual byte (sat/vB). This metric is the standard way miners compare transactions.
A larger transaction requires more block space, so even if it offers a high total fee, its fee rate might be lower than a smaller transaction with a moderate fee, making the smaller one more desirable.
Glossar
Total Transaction Fee
Cost ⎊ Total Transaction Fee represents the aggregate of all charges incurred during the execution of a financial operation, encompassing brokerage fees, exchange fees, clearing costs, and regulatory levies.
Fee Rate
Calculation ⎊ Fee rate determination within cryptocurrency derivatives, options, and financial derivatives contexts involves quantifying the cost associated with executing a trade or maintaining a position, typically expressed as a percentage of the notional value or premium.
Transaction Size
Scale ⎊ Transaction size, within cryptocurrency, options, and derivatives, fundamentally dictates participation thresholds and systemic risk exposure; it represents the nominal value of an executed trade or a portfolio’s aggregated holdings, influencing liquidity provision and market impact.
Fee
Charge ⎊ A fee within cryptocurrency, options, and derivatives represents a cost associated with executing a trade, accessing a platform, or maintaining a position, directly impacting net profitability and requiring precise quantification for strategy backtesting.
Satoshis per Virtual Byte
Metric ⎊ Satoshis per Virtual Byte (Sats/vByte) is the standard unit of measure for transaction fee density on the Bitcoin network, quantifying the cost of block space.