Why the Mempool Matters: The Hidden Competition for Confirmation

Blocknative Ethereum Web3

This essay was originally published on Bankless.


Every pending Ethereum transaction invisibly competes in the mempool to be confirmed.

While the mempool is a critical piece of blockchain infrastructure, many (most?) people have little understanding of how the mempool game works – or how the rules can be used against your best interests.

  • Are you waiting for your transaction to confirm? That’s the mempool.

  • Are you priced out by high gas fees? That’s the mempool too.

  • Are you frustrated by a stuck transaction that has blocked your wallet? Yep…the mempool.

  • Are you confused by automated bots instantly exploiting arbitrage opportunities? Yeah. You get the idea.

Fortunately, over the past few months, the mempool has started to come out of the shadows.

The industry is beginning to share compelling tales that describe the hidden world of mempool competition. A sampling of worthwhile reads include:

  1. Ethereum is a Dark Forest

  2. Evidence of Mempool Manipulation on Black Thursday

  3. Escaping the Dark Forest

  4. Staring into the Monsters Eye

  5. How to Munch on Pickles from a Whale Dinner

These narratives illustrate how the mempool can be mysterious, confounding, and even downright dangerous. Until recently, going hands-on with mempool data has been out-of-reach for all but the most sophisticated and well-financed teams.

Hence the Blocknative team is excited to help show the Bankless Nation why the mempool matters. We will introduce the core concepts, then explore the implications for traders and builders, and wrap up with some new, easy-to-use tooling for you to go hands-on with real-time mempool data.

The mempool: a competitive marketplace for confirmation

The mempool is a competitive game where winning gets your transaction confirmed as quickly as possible at the lowest fee. When you approve and sign a transaction, it enters the mempool — and joins tens of thousands of other pending transactions that are jockeying for precious block space.

In other words, the game is on for your transaction to get confirmed and go on-chain.

But the gas price is set before your transaction enters the mempool. The higher the gas price, the higher the miner incentive to include your transaction in the next block, making the mempool a first-price auction. As a result, the mempool is neither a static nor a benign environment but instead a highly dynamic – perhaps even chaotic – system.

mempool

This effectively makes the mempool a real-time marketplace for on-chain confirmation and settlement. In this marketplace, your transaction competes shoulder-to-shoulder with thousands of other transactions for miner attention.

Know the rules of competition

To help you compete, here are some of the 5 core concepts that combine to form the rules of the mempool marketplace:

1. Each node has its own version

By definition, the mempool is pre-consensus. That means that each node in the network has its own unique version of the mempool. Getting your arms around the entire mempool on your own can be next to impossible.

2. It’s open & public

Mempool data is open and publicly available to the entire network. So ‘everyone’ can see each of your transactions as they are happening. But you can also see everyone else’s transactions before they go on-chain.

3. It’s mutable

Because the mempool is pre-consensus, it is mutable. This means that pending transactions can be overwritten with replacement transactions, including Speed Ups and Cancels. Replacement transactions are critical tools for winning mempool competitions – or bowing out if conditions become unfavorable.

4. Transactions can get dropped

Network congestion can cause rapid increases in gas prices, making some pending transactions no longer competitive. Given that many nodes on the network have limited memory resources, uncompetitive transactions may be dropped by miner nodes in particular. If your transaction gets dropped, it disappears from large sections of the mempool. Further, detecting that your transaction has been dropped is difficult without complex infrastructure.

5. Transactions can get stuck

Dropped transactions can create nonce gaps, which then create stuck transactions. Stuck transactions will ‘freeze’ any further transactions from your wallet being confirmed until the nonce gap is resolved.

As you can see, the rules of the mempool are surprisingly complicated – and often interact with each other in unexpected ways. Against this backdrop, it is no surprise that the mempool is now frequently characterized as a Dark Forest.

New tools that make you more competitive

Blocknative is committed to democratizing access to mempool data and providing next-generation tools to make this data easy to act on. We recently introduced a net-new interface for working with streaming transaction data called Mempool Explorer.

Mempool Explorer is designed to help level the playing field for builders and traders just like you — everyone should have access to the data.

I recommend getting started by monitoring your hot wallet. Our early adopters report that this simple mempool data stream reduces transaction anxiety while yield farming.

Once you have mastered the basics, you can:

While the mempool can be a confusing and even scary place, it doesn’t have to be. Blocknative’s goal is to make mempool data accessible and easy to work with.

Action steps

 

Observe Ethereum

Blocknative's proven & powerful enterprise-grade infrastructure makes it easy for builders and traders to work with mempool data.

Visit ethernow.xyz

Want to keep reading?

Good choice! We have more articles.

base-101:-how-gas-works-on-base
Gas

Base 101: How Gas Works On Base

Incubated and developed by the popular centralized exchange Coinbase, Base is an Ethereum Layer..

optimism-101:-how-gas-works-on-optimism
Gas

Optimism 101: How Gas Works on Optimism

Optimism is an Ethereum Layer (L2) scaling network. It differentiates itself by increasing..

sei-101:-how-gas-fees-work-on-sei
Gas

Sei 101: How Gas Fees Work on Sei

Sei is the first parallelized EVM chain, which combines the advantages of Ethereum and Solana ...

Connect with us. Build with us.

We love to connect with teams who are building with Blocknative. Tell us about your team and what you would like to learn.

"After first building our own infrastructure, we appreciate that mempool management is a difficult, expensive problem to solve at scale. That's why we partner with Blocknative to power the transaction notifications in our next-generation wallet."

Schedule a demo