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As I understand, Monero has an adaptive block size that allows the block size to grow as needed, but also allow miners to mine blocks larger than the max block size, though giving the miner a penalty on the block reward.

So, in the last days we saw the transactions exploding, and yesterday we had more than 900 transactions on the txpool. Why don't miners just mine all the tranasctions that are on the txpool at once when it is more profitable to just collect the fees of all transactions and drop the block reward ?

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Because it's not economic for the pool or miner. There's also a "hard" cap (which goes up with median) at 2x the median. If a miner mines a too big of a block, he loses some base block reward (emission) and for it to be economic to him, the fees must be high enough to compensate and earn a little more.

Each wallet fee level corresponds to a % increase incentive for the miner. Bigger the fees, faster the increase. Bigger the increase, cheaper the fees =)

Low priority (min fee) - 1x - 0.6% increase is the "sweet spot" (economic up to 1.2%, after that it's negative earnings)

Normal priority (default fee) - 4x - 2.4% increase is the "sweet spot" (economic up to 4.8%, after that it's negative earnings)

High priority 20x - 12% increase is the "sweet spot" (economic up to 24%, after that it's negative earnings)

Ultra priority 166x - 100% increase is the "sweet spot". Can't make a bigger block than this, anyway :)

When a miner fills the block from highest to smallest fee, it will be the fee of last TX to get into a block which determines the optimal increase. So, it's not just enough to have 1TX in the pool to hasten an increase. There must be many of those, enough to make 100 blocks full of high-fee TX-es to lift the median quickly.

This is why a huge backlog can never develop.

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  • I am almost sure that when are 900tx on the mempool it is profitable.. each tx at 0.01xmr, it would give about 9XMR, more than the current blockreward
    – Pedro Gaspar
    Aug 29 '17 at 20:19
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    Yes, but you can't squeeze all 900tx-es into a single block. There's still the "hard" limit at x2 the median. They can't fit all. The amount of TX-es you can fit into a block must compensate for loss of emission block reward. Then the median grows, and the next cap gets bigger and bigger, speeding up the process. But each block must be profitable. Making a 600kB block loses the entire 7XMR reward (if 300kB is the median). How many TX-es can you fit into 600kB and what would be the fee? Surely less than 7XMR unless everyone pays the highest fee.
    – JollyMort
    Aug 29 '17 at 20:33

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