On-chain Tx Improvement

[pingu-73]

Overview

Enhance the on-chain Bitcoin transaction functionality with better UTXO selection algorithms and Replace-by-Fee (RBF) support.

Current State

• basic P2WPKH tx building and signing
• multi-source fee estimation with fallback
• dust threshold and minimum relay fee handling (NOTE: Implemented but haven't tested)
• simple largest first UTXO selection
• RBF flag enabled but no bumping logic

TODO

• Improve UTXO Selection Algorithm

• File: backend/src/services/onchain/utxo_manager.rs

• currently using largest first selection, which can:

  • Create unnecessary change outputs
  • Reduce privacy by consolidating UTXOs
  • Lead to suboptimal fee efficiency

• Sub-Tasks

  • Implement Branch and Bound algorithm for exact matches
  • Add privacy-focused selection (avoid address reuse patterns)
  • Implement coin selection strategies (smallest-first for small payments)
  • Add tests comparing selection algorithms

• Ref:

  • Bitcoin Core's coin selection

---

• Implement RBF (Replace by Fee) Support

• File: backend/src/services/onchain/transaction_builder.rs, backend/src/api/wallet.rs

• currently setting ENABLE_RBF_NO_LOCKTIME but missing:

  • Fee bumping logic
  • API endpoints for RBF
  • Tx replacement validation

• Sub-Tasks

  • Add bump_fee() method to TransactionBuilder
  • Implement fee rate increase validation (BIP 125 rules)
  • Add API endpoint /api/wallet/bump-fee
  • Handle mempool conflict detection
  • Add RBF status tracking in transaction history

• Ref:

  • BIP 125 - Opt-in RBF