Priority Fees

Definition ∞ Priority fees are additional payments made by users to incentivize network validators or miners to process their transactions more quickly. In blockchain networks, these fees act as a mechanism to bypass congestion and ensure that transactions are included in the next block. The amount of a priority fee is typically determined by market demand, with higher fees being paid during periods of network congestion to expedite transaction confirmation. This system allows users to effectively bid for faster transaction processing.
Context ∞ The concept of priority fees is a critical element in understanding transaction costs and network performance on many public blockchains, particularly during periods of high network activity. News reports often analyze how changing priority fee levels impact user experience and the economics of decentralized applications. Discussions frequently center on the fairness, efficiency, and potential for manipulation of fee markets, especially on networks like Ethereum where gas prices can fluctuate dramatically.