What Happens When Bitcoin Fee Rates Drop Below 1 sat/vB?

Bitcoin transaction fees are measured in satoshis per virtual byte (sat/vB). This unit helps miners prioritize transactions when adding blocks to the blockchain. Bitcoin's default relay policy (followed by most nodes) requires a minimum fee rate of 1 sat/vB for a transaction to be relayed across the network. This policy exists to:

1. Provide a minimum economic incentive for miners to include transactions.

2. Prevent spam by making it costly to flood the network.

3. Maintain efficient network operation by limiting mempool bloat.

Transactions paying less than 1 sat/vB (sub-1 sat/vB) are considered non-standard under this default policy. This means:

However, as the ecosystem evolves there may be some demand for sub-1 sat/vB transactions and more occasions where the miner may accept these transactions such as when the mempool cleared recently.

So how do these sub-1 sat/vB transactions work?

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⏳ When Can Sub-1 sat/vB Transactions Be Confirmed?

• Not Relayed: They are not broadcast or relayed by nodes enforcing the default policy. They will not enter the public mempool.

• Confirmation only possible if:

  1. The transaction is submitted directly to a miner (bypassing the public peer-to-peer network), or

  2. The transaction is submitted via a private relay service (like Slipstream used by some pools) that accepts sub-1 sat/vB rates, or

• Not Guaranteed: Even if directly submitted to a miner or pool, inclusion is never guaranteed.

Miners prioritize transactions based on their own fee thresholds and strategies. Sub-1 sat/vB transactions are the lowest priority and will only be mined when there is plenty of unused block space and the individual miner or mining pool explicitly chooses to accept and mine sub-1 sat/vB transactions using custom mempool policies.

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💡 Potential Benefits of Sub-1 sat/vB Transactions

• Lower Costs: If confirmed, they enable cheaper transactions, potentially benefiting low-value transfers or microtransactions. (It wouldn’t make sense if you want send $1 worth of BTC but have to spend $5 on gas right)

• Reduced Minting Costs: Protocols relying heavily on on-chain transactions for operations like minting (e.g., Runes, Ordinals, BRC-20 tokens) could see significant cost reductions. More UNCOMMON•GOODS minted at -1sats/vb?

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⚠️ Downsides and Network Risks

• Minimal Impact on Miner Revenue (Direct): We think the direct impact on overall miner revenue is negligible, as sub-1 sat/vB transactions represent a tiny fraction of fees paid, especially compared to block rewards. However, widespread adoption could exert downward pressure on fee rates.

• Increased Spam Transactions: Lowering the effective cost barrier significantly makes it cheaper for attackers to flood the network with spam or dust transactions (very small outputs), potentially disrupting normal operation.

• UTXO Proliferation: Small transactions often create many unspent outputs (UTXOs), which increases the load on indexing services and node storage.

• Mempool Strain: If nodes allow too many low-fee transactions, mempools may swell. This increases memory requirements for nodes, slows down mempool synchronization.