BTC Tx Fee Index
This index tracks the the median Sat/vB per block.
Derivation process:
Retrieve all the transaction from a block via Bitcoin Core, and derive the median Sat/vB per block.
The index contract stores the data cumulatively.
It's updated on a daily basis.
Example:
0
20
20
1
13
33
2
5
38
Why is the median used instead of the average?
The consideration is to remove the outliers in a block. With the increasing amount of high-value transactions on BTC, the incentives to snipe partially-signed UTXOs are higher.
Is the index number the real average of the median value of every block during the day or is it sampled?
The index includes all the blocks except for empty blocks during the period, there’s no sampling.
What kind of blocks are excluded from the index?
For blocks with 1 transaction and 0 fees, we exclude it along with any other coinbase blocks.
Mining pools frequently mine empty blocks to keep up with the block template broadcasting latency. For purpose of transaction fees hedging/trading, this behavior is irrelevant for anyone other than pool operators. Hence we exclude these blocks from the index.
If a block has more than 1 transaction with 0 fees, we treat it as a normal block. We analyzed historical data from the past two years, max(0-fees transactions per block) = 6. Given that most blocks have thousands of transactions, the impact of 0-fees transactions on the median of the block is de minimis.
How is the index tracked?
The BTC Tx Fees Index is a benchmark that tracks the median Sat/vB per block. It is derived by taking the satoshi per virtual byte of all transactions within a block and finding the median. Alkimiya uses Bitcoin Core RPC methods getblock and getrawtransaction to calculate the median feerate per block.
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