Seems to me like it's totally broken by CPFP, where a low-feerate tx is paid for by a high-feerate descendant. According to @SatoshiLite's logic, the block-header-minfeerate will be reporting the low-freerate tx as the floor even though it's not representative of actual policy.
4/ But the kicker is that the benefits of this manipulation (which again costs a lot of money) would go directly to the your mining competitors.
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5/ Since the other 49 blocks would be mined by other miners, not you. You’ll be spending a lot of money just to line your competitors’s pockets and weaken your own cartel. Makes no sense.
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6/ This attack, if carried out, can also be easily spotted on the blockchain.
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7/ It also can be easily mitigated, as Charlie has pointed out, as long as SPV clients don’t use the same rule for estimating fee. Min feerate is only a fee signal, it’s up to each SPV client how to interpret it.https://twitter.com/SatoshiLite/status/949802676056834048 …
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8/ In conclusion, I think this attack is unrealistic, easily spotted, and easily mitigated against.
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I think it's unlikely, but not unrealistic. My main point was that I think the risk of this attack, or more clever variants, means that SPV clients would be better off using existing semi-centralized fee estimation services rather than the miner-curated minimum block fee info.
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I would argue that it’s easier to manipulate these centralized fee estimation services than to manipulate min feerate consistently over X blocks- where X is a large number :-)
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Btw, there is no reason SPV fee estimation can’t get smarter. “Median over X blocks” is just the naive algorithm. Charlie already mentioned another one like having a fallback.
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If you want to get fancy, you can do anomaly detection / cluster analysis over a large distribution of min feerates. Given enough blocks, this kind of analysis should produce a fee estimate not too far off from a full node’s estimate.
End of conversation
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