What is a mempool and why is it important for crypto transactions?

What is a mempool?

A mempool (short for memory pool) is a kind of digital waiting room for crypto transactions that have been created but not yet confirmed. When you send a crypto transaction, it is not immediately finalized and recorded on the blockchain. All blockchains use similar queue mechanisms like mempools to process transactions in an orderly manner. Without mempools, transactions would be processed randomly or chaotically. This would make the network unstable and unreliable.

This makes the mempool an essential link between users who send transactions and the network that ultimately validates and finalizes those transactions. This was not always the case, but gradually developed as blockchains became larger and more active.

It is important to know that there are multiple mempools per cryptocurrency; there is therefore no single central mempool. We explain this in more detail in this article.

Key Takeaways

• A mempool is a digital waiting area where crypto transactions wait before being permanently confirmed on the blockchain.
• Each blockchain node has its own mempool, which means there is no central or fixed order of transactions.
• Miners and validators select transactions from the mempool, usually prioritizing transactions with higher network fees.
• During periods of network congestion, the mempool can fill up, leading to longer waiting times and higher transaction costs.
• Understanding the mempool helps users make better decisions about timing and fees when sending transactions.

Why blockchains cannot function without a mempool

Unlike traditional payment systems such as banks or payment apps, blockchains operate without a central party that immediately approves transactions. Therefore, a different method is needed to process transactions in a decentralized way. Crypto networks consist of thousands of independent computers, known as nodes, which together verify whether transactions are valid. Ultimately, it is one (or a small group) of these participants (miners or validators) that actually include the transactions in a new block on the blockchain.

Because new blocks are often created at a predefined frequency (about every 10 minutes for Bitcoin) and have a limited block size (the maximum number of transactions per block), a queue almost always forms. The mempool is designed to manage this queue. It ensures that transactions are collected, checked, and sorted before they are permanently recorded on the blockchain. This makes the network scalable and secure, even during periods of high activity.

How does a transaction move through the mempool?

Step 1: A transaction is sent
The moment you click “send” in your crypto wallet, a transaction is created. Your wallet signs this transaction with a digital signature, proving that you are the owner of the crypto you want to send and that you authorize the transfer. When sending a transaction, you also specify how much network fees you are willing to pay.

Step 2: The transaction is broadcast across the network
After being signed, the transaction is broadcast across the blockchain network. Multiple nodes receive the transaction at roughly the same time.

Step 3: Nodes verify whether the transaction is valid
Each node that receives your transaction independently checks whether it complies with the rules. This includes verifying that you have sufficient balance, that the digital signature is valid, and that the transaction is correctly structured according to the blockchain protocol.

Step 4: The transaction enters the mempool
If the transaction is deemed valid, it is placed in the node’s mempool. From this point on, the transaction is in the queue and waiting for confirmation. Because each node has its own mempool, the same transaction can appear in multiple mempools at the same time. Through a block explorer, users can view these unconfirmed transactions and see whether a transaction is still in the mempool and how congested the network is.

Step 5: Miners or validators select transactions
Depending on the consensus mechanism used by the blockchain, it is determined who may add a new block to the blockchain. Miners (in Proof-of-Work) or validators (in Proof-of-Stake) who are allowed to add a new block select transactions from their own mempool to include in that block. They usually prioritize transactions with higher fees.

Step 6: The transaction is confirmed
Once a miner or validator adds the new block to the blockchain, the transaction is permanently confirmed. The transaction is then removed from all mempools, because it has been executed and is now permanently recorded on the blockchain.

Is there one mempool per cryptocurrency?

No. Although people often refer to “the mempool,” this does not mean there is a single central mempool. Each node has its own mempool containing the transactions it has received and approved. During periods of low network activity, mempools tend to look very similar because transactions spread quickly across the network. During busy periods, differences between mempools can emerge.

This decentralized setup prevents any single party from controlling the transaction flow and contributes to the security of the network. It also means that there is no fixed order and that not all transactions are present in every mempool.

Transaction fees (network fees) and priority

An important characteristic of the mempool is that transactions are not processed in the order they are received, but based on priority. This priority is largely determined by the network fee a user attaches to their transaction. This fee is the compensation you pay to the network for processing your transaction.

Miners and validators receive these fees as part of their block reward for their work and therefore have a financial incentive to process transactions with higher fees first. Transactions with low network fees often remain in the mempool for a longer time. This mechanism works like a market, where users compete with each other for the limited block space in new blocks.

What happens during mempool congestion?

When many people send transactions at the same time, the mempool can become congested. This network congestion occurs when transactions cannot be processed immediately. It often happens during periods of high volatility, popular NFT launches, or sudden news events.

Technically, the network continues to function as normal. However, because there are more transactions than available block space, waiting times and fees increase. This can be frustrating, especially for users who do not fully understand what a mempool is and why their transaction is delayed.

Can transactions get stuck in the mempool?

Yes. A transaction can remain in the mempool for a long time if the network fees are set too low during periods of congestion. In some cases, a transaction may even drop out of the mempool. This does not mean your crypto is lost, but that the transaction was never confirmed and your funds remain in your wallet.

On some blockchains and in certain wallets, it is possible to speed up, replace, or cancel a transaction. This varies by cryptocurrency and network, which is why accurate fee estimation is important.

How can you use the mempool?

Although the mempool remains invisible to many users, understanding it can help you make better transaction decisions. For example, you can check how congested the network is and what fees are currently common. This allows you to decide whether it makes sense to send a transaction now or wait for a quieter moment. There are several websites available where users can view the mempool and gain insight into unconfirmed transactions and network congestion.

Modern crypto wallets do this automatically by analyzing current mempool data and providing fee recommendations. Still, it is also useful for traders to understand what happens behind the scenes. This helps prevent transactions from getting stuck due to low fees or trades being executed later than expected during periods of network congestion.

Final thoughts

The mempool plays a crucial but often invisible role within blockchain networks. It is the place where transactions are collected, verified, and prioritized before being permanently recorded on the blockchain. Thanks to its decentralized design and the use of network fees, the mempool ensures that blockchains continue to function during busy periods, although sometimes with higher costs or longer waiting times. Those who understand how the mempool works better understand why transactions can be delayed and how timing and fees influence that process. This insight helps users interact with crypto in a more informed, efficient, and controlled way.