Definition
A transaction fee market is the mechanism by which a blockchain protocol and its participants collectively determine the fees paid to include transactions in blocks. It consists of the rules, incentives, and competitive dynamics that shape how users bid for limited block space and how validators or miners prioritize, select, and price transactions based on those bids and prevailing network conditions.
In Simple Terms
A transaction fee market is the system that sets how much people pay to get their transactions written into a blockchain. Users offer fees, and validators or miners choose which transactions to include based on those fees and current demand for space in each block.
Context and Usage
The term transaction fee market is commonly used in discussions about block space scarcity, fee volatility, and incentive design in public blockchains. It appears in protocol research, economic analyses of validator or miner behavior, and debates about scalability and congestion. It is also central to conversations about how fee-setting rules affect user costs, network security, and the distribution of revenue among network participants.