Fee Market

A fee market is the mechanism within a blockchain network where users bid to have their transactions included in the next block. Because block space is a finite resource, users must pay transaction fees to incentivize validators or miners to process their requests.

When network demand exceeds capacity, fees rise, creating a competitive environment for transaction priority. This system serves as a decentralized auction for computational resources.

It prevents spam by making it costly to flood the network with useless data. Effectively, the fee market aligns the incentives of network users with those of the validators who secure the ledger.