Who is paying very very large fees when not needed and why? - page 4.

DaveF

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Quote from: nc50lc on June 27, 2021, 10:27:19 PM

Quote from: DaveF on June 27, 2021, 05:46:58 PM

WTF?

I noticed that their absolute fee are all too "exact", suggests that they've set the total fee when creating the txns, not the fee rate.
Sender(s) may be unaware that the prioritization is based from the fee rate or doesn't care about the extra fee and most likely using a client that can input/edit absolute fee other than the fee rate.

For example, those first three with 2,291sat/vB (x2) and 822.0sat/vB have a 0.005BTC fee, and some of the rest with extremely high fee looks the same but lower (0.002BTC absolute fee).

Did not think of that for some reason.
It's been a while since I did any real trading on exchanges and while I do remember some of them charging high fees I also remember a lot of them not actually paying them. It was just another profit center...

You would think that they would stiff be charging .005 and paying .000005 and pocketing the difference. That's just good business.

Quote from: Quickseller on June 28, 2021, 12:12:20 AM

Quote from: HCP on June 27, 2021, 11:54:02 PM

As someone mentioned above, when you're transacting millions, nickel and diming on fees isn't really a concern. What's $150-200 when you're shifting $5mil worth of coins? Tongue

These are exchanges that are most likely processing withdrawal transactions. This is not the exchange's actual money that is being moved, it is money they are hold for and on behalf of their customers, and will have to make up for high transaction fees in the form of trading fees (or other fees) paid by their customers.

If they are paying $200 when they could have paid $2 10,000 times, all of a sudden, they have paid almost $2 million extra worth of transaction fees.

And if you have outside investors that is when bad things happen at times to management....

Quote from: ABCbits on June 28, 2021, 03:26:33 AM

Quote from: HCP on June 27, 2021, 11:54:02 PM

Yeah, it looks like some preconfigured system that is setup using absolute fees as opposed to calculating fee rates. Not sure why you would do that, but there you go...

Aside from poor preconfigured system, it's also possible it's set up by intern or worker who're underpaid.

Or they were undertrained. Or overworked.

Well thanks everyone I guess that answerers what I asked.

-Dave

ABCbits

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Quote from: HCP on June 27, 2021, 11:54:02 PM

Yeah, it looks like some preconfigured system that is setup using absolute fees as opposed to calculating fee rates. Not sure why you would do that, but there you go...

Aside from poor preconfigured system, it's also possible it's set up by intern or worker who're underpaid.

Quote from: Quickseller on June 28, 2021, 12:12:20 AM

If they are paying $200 when they could have paid $2 10,000 times, all of a sudden, they have paid almost $2 million extra worth of transaction fees.

Good point, however exchange usually charge very high withdrawal fee. They still earn decent profit from high withdrawal fee even if they pay high transaction fee (on Bitcoin network) while prevent user complaint about their balance isn't arrived/confirmed yet.

o_e_l_e_o

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Quote from: BitMaxz on June 27, 2021, 09:45:46 PM

I think it's not misconfigured they intentionally paying a large transaction fee to help and rewarded miners. I just heard in a tweet before about that I don't know which exchanges said that but my guess it's from CEO Binance tweet to attract miners to mine on their pool.

This doesn't really make sense. They aren't holding back their own transactions to only be mined by their own mining pool. Doing so would introduce huge delays as their transaction would only be confirmed when their mining pool found a block, which could take hours. They are broadcasting their transactions normally, meaning they are not incentivizing miners on their pool specifically.

Quote from: BitMaxz on June 27, 2021, 09:45:46 PM

Take note Binance is now operating a pool so they have control over the transaction which one will include on the block so they look for transactions with higher fees to include them in the blocks they mined(To earn more rewards).

All pools do this, with the exception of mining their own transactions with a lower fee. Again, this does not explain these high fee transactions.

Exchanges shoulder most of the blame for this, but they also start a vicious circle. Lots of people use automatic fee suggestions without paying attention or maybe not understanding what an appropriate fee is. These algorithms see some transactions paying 100 sats/vbyte and think they need to match that, so they do, and people blindly accept it. This starts a chain reaction of people paying high fees, which just makes it worse and worse until we reach a weekend and things settle down a bit. If everyone paid attention to what they were paying, everyone could constantly save about 90% of their fees.

franky1

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Quote from: DaveF on June 27, 2021, 05:46:58 PM

I have been seeing more and more very large fees paid for transactions at times well over 20x what is needed to get into the next block.
Is this just badly broken software doing fee estimation or something else?

Looking at: https://btc.com/000000000000000000076e53c720e850cc46fcbc42a65f7aa0917755daec3c22
We have 2 transactions at over 2k sat/vbyte

if you look at the first few transactions
bc1qmex.. bc1qmex bc1qmex

its the bitmex exchange
they seems to be shuffling funds around in their coldwallets

strangely they pay 0.005btc for 190 and 160btc
0.005 for 1.4btc
0.002 for 24btc

Quickseller

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Quote from: HCP on June 27, 2021, 11:54:02 PM

As someone mentioned above, when you're transacting millions, nickel and diming on fees isn't really a concern. What's $150-200 when you're shifting $5mil worth of coins? Tongue

These are exchanges that are most likely processing withdrawal transactions. This is not the exchange's actual money that is being moved, it is money they are hold for and on behalf of their customers, and will have to make up for high transaction fees in the form of trading fees (or other fees) paid by their customers.

If they are paying $200 when they could have paid $2 10,000 times, all of a sudden, they have paid almost $2 million extra worth of transaction fees.

HCP

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Yeah, it looks like some preconfigured system that is setup using absolute fees as opposed to calculating fee rates. Not sure why you would do that, but there you go... As someone mentioned above, when you're transacting millions, nickel and diming on fees isn't really a concern. What's $150-200 when you're shifting $5mil worth of coins? Tongue

Aside from these cases of absolute fees being used by what appears to be commercial entities... another common scenario I have noted for ridiculously high fees, is malware/theft. The thieves tend to send with very high fees to (I assume) try and prevent any chance of a double spend and, of course, guarantee next block inclusion of their transaction.

nc50lc

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Quote from: DaveF on June 27, 2021, 05:46:58 PM

WTF?

I noticed that their absolute fee are all too "exact", suggests that they've set the total fee when creating the txns, not the fee rate.
Sender(s) may be unaware that the prioritization is based from the fee rate or doesn't care about the extra fee and most likely using a client that can input/edit absolute fee other than the fee rate.

For example, those first three with 2,291sat/vB (x2) and 822.0sat/vB have a 0.005BTC fee, and some of the rest with extremely high fee looks the same but lower (0.002BTC absolute fee).

pooya87

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I believe most of the times this is poor design combined with the sender not wanting to have their transaction stuck. For example a service making payments wanting to avoid the headache of answering the customer why their money "hasn't arrived yet" that also has a terrible backend with a poor code that suggests much higher fees than just paying a slightly higher one.

Sometimes they (both some services and some phone wallets I've seen) use malicious third party fee estimation services such as bitcoinfees.earn.com that intentionally report a ridiculously higher fee.

BitMaxz

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I think it's not misconfigured they intentionally paying a large transaction fee to help and rewarded miners. I just heard in a tweet before about that I don't know which exchanges said that but my guess it's from CEO Binance tweet to attract miners to mine on their pool.

About that block, the 2nd and 3rd transaction that pays 2,283 Sats/vByte transacted almost 5-6 million in value so paying with that fee is fair enough it's around 162.99
in USD. So my guess it was being made from a Binance customer that doesn't know how to calculate the transaction fee and doesn't want their transaction to stuck on the network.

Take note Binance is now operating a pool so they have control over the transaction which one will include on the block so they look for transactions with higher fees to include them in the blocks they mined(To earn more rewards).

Quickseller

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Quote from: DaveF on June 27, 2021, 05:46:58 PM

I have been seeing more and more very large fees paid for transactions at times well over 20x what is needed to get into the next block.
Is this just badly broken software doing fee estimation or something else?

Looking at: https://btc.com/000000000000000000076e53c720e850cc46fcbc42a65f7aa0917755daec3c22
We have 2 transactions at over 2k sat/vbyte

I think cf6ddaf4318de8ffeb8f917c2f877eeffe5b2eb80aaa9763b72148ba16c1ab38 is either Binance or a customer of Binance. IMO 485d09130be0ce79d825e118dc6c26463d934e278eb782114ae5e11463d0269c is probably also Binance, but the link to other transactions involving the sending address is less conclusive.

Poloniex paid 350+ sat/vByte in that block.

It seems that Poloniex is behind the 300+ sat/vByte transactions. I think Binance is probably behind the 800 sat/vByte and higher transactions in the block you cite. My guess is they have a misconfigured wallet that creates transactions. The majority of their withdrawals are handled via automation, and as long as their wallet balance matches what their records say it should be, there probably isnt anyone who is actually looking at the transactions they process unless someone complains about something.

Bitcoin_Arena

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1. Perhaps someone who doesn't know what the fee rate of sats/byte is?
So. when they see a fee rate suggestion of 2000 sats/byte they have no freakin Idea what it is or how low the optimal transaction fee rate is right now.

2. With the exception of very few transactions, Most of the high fee rate transactions seem to be spend huge amounts of BTC. So the people transacting don't care about such fee rates as they still seem to small as compared to what they are spending.

DaveF

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I have been seeing more and more very large fees paid for transactions at times well over 20x what is needed to get into the next block.
Is this just badly broken software doing fee estimation or something else?

Looking at: https://btc.com/000000000000000000076e53c720e850cc46fcbc42a65f7aa0917755daec3c22
We have 2 transactions at over 2k sat/vbyte
1 at 800+
1 at 500+
and dozens at 200 to 300+
You could have gotten into the block @ 30 sat
If you wanted to be SURE, then do 60 sat.

WTF?

This seems to be happening a lot lately, either I am just paying more attention to it and it has always been happening or???

-Dave

Topic: Who is paying very very large fees when not needed and why? - page 4. (Read 1074 times)