Mempool Based Fee Estimation on Bitcoin Core

Implementation
8

I’ve updated to a format that is more interesting to look at. Thanks to additional data from @ClaraShk , I’ve filled between the 5th percentile fee rate to the 75th percentile fee rate.

fee_estimates
fee_estimates1238×1278 106 KB

Overall, based on my observations, using the threshold is not as much of an underestimation as I thought it would be. For most cases, estimates fall within the target block fee rate 5th percentile to 75th percentile range.

And I also calculated the summary of my observation:

Total of 19,154 estimates were made from 2024-02-28 01:57:56 to 2024-03-12 13:23:05 (Block 832330 to Block 834362)

CBlockPolicyEstimator::estimatesmartfee (economic mode) with confirmation target 1

  • 5,643 estimates overpaid, accounting for 29.46% of the total estimates
  • 2,114 estimates underpaid, accounting for 11.04% of the total estimates
  • 11,397 estimates fall within the range, accounting for 59.50% of the total estimates

Mempool based estimate for next block (Without Threshold)

  • 10 estimates overpaid, constituting 0.05% of the total estimates
  • 3,637 estimates underpaid, constituting 18.99% of the total estimates
  • 15,507 estimates fall within the range, constituting 80.96% of the total estimates

Mempool estimate for next block (With threshold of CBlockPolicyEstimator::estimatesmartfee (economic mode) confirmation target 1)

  • 6 estimates overpaid, constituting 0.03% of the total estimates
  • 5,070 estimates underpaid, constituting 26.47% of the total estimates
  • 14,078 estimates fall within the range, constituting 73.50% of the total estimates

Using 5th percentile as the low end and 75th Percentile as the high end.

You can view it on Collab and edit the block ranges; it has a range threshold of 200 blocks:

Or run the notebook from the repository GitHub - ismaelsadeeq/fee-estimates-analysis and run the notebook.

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