What is meant by the term 'transaction pinning'?
Transaction pinning happens when:
- I broadcast a transaction that signals opt-in RBF
- the transaction does not get confirmed because the feerate is too low
- someone else broadcasts a new (child) transaction spending one of the outputs of my transaction
- I now can't bump the fee on the transaction unless I include a fee greater than that of the combined original transaction + the child transaction (BIP 125, rule 3).
If the child transaction in (3) is large (eg a commercial service sweeping up lots of transaction outputs), then the total fee that I'd need to pay for a valid RBF would be very large.
In this scenario, my original transaction has been 'pinned' by the child transaction.
Russell O'Connor has proposed changing the RBF policy rules to alleviate this problem.