Who Typically Sets the Minimum Transaction Fee in a Decentralized Network?
The minimum transaction fee is not typically set by a single authority in a decentralized network. Instead, it is determined by a combination of factors.
The protocol itself may have a minimum fee for a transaction to be considered valid. More commonly, individual node operators and miners set a minimum relay fee as a policy for transactions they will accept into their mempool and broadcast.
The effective minimum fee is ultimately determined by the competitive fee market, where the lowest confirmed fee is set by the collective behavior of profit-maximizing miners.
Glossar
Effective Minimum Fee
Cost ⎊ The effective minimum fee represents the lowest possible cost for executing a transaction, often determined by network requirements or exchange policies.
Minimum Transaction Fee
Impediment ⎊ A minimum transaction fee represents a fixed cost associated with executing a trade or transfer within a cryptocurrency ecosystem, options market, or financial derivative exchange, directly impacting capital efficiency.
Minimum Relay Fee
Threshold ⎊ The Minimum Relay Fee is a node-specific, non-consensus parameter defining the lowest transaction fee rate, typically expressed in satoshis per virtual byte (sat/vByte), that a full node will accept for an unconfirmed transaction to enter its memory pool and be relayed to other peers.