Erlay (BIP330)

Erlay is a proposed bandwidth-efficient transaction-relay protocol for Bitcoin, specified in BIP330. Today, nodes announce every unconfirmed transaction to every peer through flooding (gossip), and transaction relay accounts for roughly half of a node's total bandwidth. Erlay's goal is to let a node add many more peer connections, strengthening network resilience, without a proportional rise in bandwidth.

Flooding plus set reconciliation

Erlay keeps a limited amount of flooding among well-connected, publicly reachable nodes, but routes most announcements through periodic set reconciliation. Each node maintains a reconciliation set per peer; rather than listing every transaction, two peers exchange a compact sketch and compute only the difference between their sets. The cost of reconciliation scales with the size of that difference, not the size of either mempool.

Minisketch and the sendtxrcncl signal

The reconciliation math is implemented by the Minisketch library, which uses the PinSketch error-correcting-code algorithm and delivers sub-millisecond performance for the small set differences seen in practice. Peers advertise willingness to reconcile with a sendtxrcncl message during the handshake; nodes that do not understand it simply ignore it. As of the latest development snapshots Erlay remains a proposal: only the negotiation-signaling groundwork has landed in Bitcoin Core, and full reconciliation is not yet enabled by default.

Erlay targets transaction announcements, whereas Compact Block Relay (BIP152) optimizes block propagation. For complementary privacy at the relay layer, see Dandelion (BIP156).