Replace by Fee

Replace By Fee is a feature that allows a user to update an unconfirmed transaction in the mempool by broadcasting a new version of the same transaction with a higher fee. This is often used when a user realizes their initial fee was too low to be picked up by miners, leading to a stuck transaction.

By using the same inputs as the original, the new transaction effectively cancels the old one once it is confirmed. This mechanism is critical for managing transaction flow in volatile markets where rapid price changes make speed essential.

It prevents users from being trapped by low-fee settings during periods of unexpected network congestion. From a systems risk perspective, it provides a safety valve for participants to regain control over their capital.