Definition
A fee market is a blockchain-level mechanism that allocates limited block space by letting users attach fees to their transactions and having validators or miners prioritize higher-fee transactions. It describes the competitive pricing environment in which transaction fees are formed, reflecting demand for inclusion in upcoming blocks and the supply constraints of block capacity.
In Simple Terms
A fee market is the system that decides how much people pay to get their transactions included in a block. When many users want to transact at the same time, they offer higher fees to be chosen first, and the network naturally sorts transactions by the fees they are willing to pay.
Context and Usage
The term fee market is commonly used when discussing how a blockchain handles congestion, how transaction costs are determined, and how block space is economically allocated. It appears in protocol design debates, mempool policy discussions, and analyses of validator or miner incentives, especially in relation to gas pricing, MEV extraction, and transaction ordering within each block.