Fee Rate = Transaction Size / Weight
Lower Fees = Longer time for transaction to be confirmed
Too low a fee rate might cause a transaction to never be confirmed
Due to fluctuation in the demand of Bitcoin the fee rate required to get a block accepted might change
The process of increasing the fee once the transaction is created is called fee bumping
Replace by Fee (RBF) Fee Bumping
A conflicting transaction that has an higher fee is created
Conflict occurs when multiple transactions try to spend the same UTXOs
To prevent users from creating unlimited conflicting transactions that use up the bandwidth of the network each conflicting transaction has to have a higher transaction fee than the previous one
Opt-in RBF
Creator of unconfirmed transaction can signal to miners and full nodes that they want to allow transaction replacement
Enabled on Bitcoin Core by default
Full RBF
Any unconfirmed transaction can be replaced with a transaction with higher fees
Child Pays for Parent (CPFP) Fee Bumping
Anyone receiving an unconfirmed transaction can incentivize a miner to confirm the transaction by spending the output
The transaction to be confirmed is the parent and the transaction spending the output of the parent is the child
A miner can create a package of transactions (parent & child) to see if it would be profitable to mine them together in the same block
Transition package can be created across generations (parent, child & grandchild)
This is called ancestor fee rate mining
Package Relay
Early versions of Bitcoin did not place any limit on the unconfirmed transactions that could be saved in their mempool for relaying later
This was later changed to allow a max storage of one days worth of transactions or packages that have the highest fee rates
This creates a dependency problem as a parent that does not have a high enough fee rate would need to be kept in memory to see if there will be a child transaction that bumps the fees
To solve this issue Package Replay were implements which allows nodes to replay all the transactions in a package as a single unit
Transaction Pinning
Because of the DDoS prevention rule of RBF and CPFP the spender is not able to bump the fees on their transaction
Fee Snipping
Miner reorganizes the transaction in the candidate block with transactions in the mempool that have a higher fee