Subject: [bitcoin-dev] BIP proposal: No chaining off replaceable transactions

From: Rhavar <[email-masked]>
Date: Sun, 02 Jul 2017 16:35:22 -0400

==Abstract==
BIP125 allows transactions to opt into replaceability with a primary use case
of allowing users to increase the fees of unconfirming transactions, helping create
a more efficient fee market place.
However this goal is hindered when the receiver of a transaction spends from the
unconfirmed output, which exposes the sender to the awkward position of needing
to pick between needing to pay an effectively unbounded amount of money as per the BIP125 rules, or not fee bump at all.
This is especially problematic in the case of batched sends in which there are
multiple independent receivers. In practice this means wallets and services can not effectively low ball the fee of transactions, with the intention of fee bumping due to the risk of the receiver spending or sweeping it before it confirms.
In order to support a healthy fee marketplace, this proposal aims to increase
the utility of bip125 by making transactions that spend an unconfirmed BIP125
output non-standard.
==Summary==
This policy specifies a max chain depth of 1 for any BIP125 transactions.
==Impact==
Receivers of BIP125 transactions will need to wait until the transaction
has confirmed before spending from it. This will not be significantly different
than it is currently as they receivers need to be monitoring for replacements.
If senders want to make further transactions before the BIP125 transaction confirms,
and need to utilize the change of the transaction: they will need to replace the
transaction with a one that makes the other send in "pass through" style or first
finalize the BIP125 transaction and then chain from the spend normally.

-Ryan