What Is the Economic Rationale for a Miner to Always Prioritize Fee-Paying Transactions?
The economic rationale is based on rational self-interest and profit maximization. Miners invest significant capital in hardware and electricity, making them profit-seeking entities.
Since block space is a limited resource, a miner's best strategy is to fill their block template with transactions that yield the highest fee-per-byte. Including a zero-fee transaction represents an opportunity cost, as that space could have been used for a profitable transaction.
Prioritizing fee-paying transactions ensures the miner achieves the maximum possible immediate revenue from the block they successfully mine.
Glossar
Opportunity Cost
Sacrifice ⎊ The concept of opportunity cost within cryptocurrency, options, and derivatives fundamentally represents the forgone benefit from selecting one strategy over another.
Profit Maximization
Strategy ⎊ Profit maximization within cryptocurrency, options trading, and financial derivatives represents a dynamic allocation of capital seeking the highest risk-adjusted returns, frequently employing quantitative models to identify arbitrage opportunities and exploit temporary market inefficiencies.
Transaction Selection
Criterion ⎊ Transaction selection is the critical process where a block producer, such as a miner or validator, chooses a subset of pending transactions from the mempool to include in the next canonical block.
Economic Rationale
Valuation ⎊ Economic rationale within cryptocurrency, options, and derivatives centers on establishing a justifiable price reflecting inherent risk and potential return, diverging from traditional asset valuation due to novel characteristics like network effects and protocol governance.
Fee-Paying Transactions
Mechanism ⎊ Fee-Paying Transactions within cryptocurrency, options, and derivatives markets represent the quantifiable costs associated with executing trades and maintaining positions, directly impacting net profitability and strategic decision-making.