23 files changed, 1136 insertions, 42 deletions

diff --git a/doc/policy/mempool-replacements.md b/doc/policy/mempool-replacements.md
index b3c4239b73..96ab4112e2 100644
--- a/doc/policy/mempool-replacements.md
+++ b/doc/policy/mempool-replacements.md
@@ -11,7 +11,8 @@ their in-mempool descendants (together, "original transactions") if, in addition
 other consensus and policy rules, each of the following conditions are met:
 
 1. The directly conflicting transactions all signal replaceability explicitly. A transaction is
-   signaling replaceability if any of its inputs have an nSequence number less than (0xffffffff - 1).
+   signaling BIP125 replaceability if any of its inputs have an nSequence number less than (0xffffffff - 1).
+   A transaction also signals replaceibility if its nVersion field is set to 3.
 
    *Rationale*: See [BIP125
    explanation](https://github.com/bitcoin/bips/blob/master/bip-0125.mediawiki#motivation).
diff --git a/src/Makefile.am b/src/Makefile.am
index e452b42533..3e8870c828 100644
--- a/src/Makefile.am
+++ b/src/Makefile.am
@@ -242,6 +242,7 @@ BITCOIN_CORE_H = \
   node/validation_cache_args.h \
   noui.h \
   outputtype.h \
+  policy/v3_policy.h \
   policy/feerate.h \
   policy/fees.h \
   policy/fees_args.h \
@@ -441,6 +442,7 @@ libbitcoin_node_a_SOURCES = \
   node/utxo_snapshot.cpp \
   node/validation_cache_args.cpp \
   noui.cpp \
+  policy/v3_policy.cpp \
   policy/fees.cpp \
   policy/fees_args.cpp \
   policy/packages.cpp \
@@ -702,6 +704,7 @@ libbitcoin_common_a_SOURCES = \
   netbase.cpp \
   net_permissions.cpp \
   outputtype.cpp \
+  policy/v3_policy.cpp \
   policy/feerate.cpp \
   policy/policy.cpp \
   protocol.cpp \
@@ -960,6 +963,7 @@ libbitcoinkernel_la_SOURCES = \
   node/blockstorage.cpp \
   node/chainstate.cpp \
   node/utxo_snapshot.cpp \
+  policy/v3_policy.cpp \
   policy/feerate.cpp \
   policy/packages.cpp \
   policy/policy.cpp \
diff --git a/src/policy/rbf.cpp b/src/policy/rbf.cpp
index 76ab2b1a96..f0830d8f22 100644
--- a/src/policy/rbf.cpp
+++ b/src/policy/rbf.cpp
@@ -115,11 +115,11 @@ std::optional<std::string> HasNoNewUnconfirmed(const CTransaction& tx,
 }
 
 std::optional<std::string> EntriesAndTxidsDisjoint(const CTxMemPool::setEntries& ancestors,
-                                                   const std::set<uint256>& direct_conflicts,
+                                                   const std::set<Txid>& direct_conflicts,
                                                    const uint256& txid)
 {
     for (CTxMemPool::txiter ancestorIt : ancestors) {
-        const uint256& hashAncestor = ancestorIt->GetTx().GetHash();
+        const Txid& hashAncestor = ancestorIt->GetTx().GetHash();
         if (direct_conflicts.count(hashAncestor)) {
             return strprintf("%s spends conflicting transaction %s",
                              txid.ToString(),
diff --git a/src/policy/rbf.h b/src/policy/rbf.h
index fff9828482..5a33ed64a3 100644
--- a/src/policy/rbf.h
+++ b/src/policy/rbf.h
@@ -80,7 +80,7 @@ std::optional<std::string> HasNoNewUnconfirmed(const CTransaction& tx, const CTx
  * @returns error message if the sets intersect, std::nullopt if they are disjoint.
  */
 std::optional<std::string> EntriesAndTxidsDisjoint(const CTxMemPool::setEntries& ancestors,
-                                                   const std::set<uint256>& direct_conflicts,
+                                                   const std::set<Txid>& direct_conflicts,
                                                    const uint256& txid);
 
 /** Check that the feerate of the replacement transaction(s) is higher than the feerate of each
diff --git a/src/policy/v3_policy.cpp b/src/policy/v3_policy.cpp
new file mode 100644
index 0000000000..158881aeb9
--- /dev/null
+++ b/src/policy/v3_policy.cpp
@@ -0,0 +1,220 @@
+// Copyright (c) 2022 The Bitcoin Core developers
+// Distributed under the MIT software license, see the accompanying
+// file COPYING or http://www.opensource.org/licenses/mit-license.php.
+
+#include <policy/v3_policy.h>
+
+#include <coins.h>
+#include <consensus/amount.h>
+#include <logging.h>
+#include <tinyformat.h>
+#include <util/check.h>
+
+#include <algorithm>
+#include <numeric>
+#include <vector>
+
+/** Helper for PackageV3Checks: Returns a vector containing the indices of transactions (within
+ * package) that are direct parents of ptx. */
+std::vector<size_t> FindInPackageParents(const Package& package, const CTransactionRef& ptx)
+{
+    std::vector<size_t> in_package_parents;
+
+    std::set<Txid> possible_parents;
+    for (auto &input : ptx->vin) {
+        possible_parents.insert(input.prevout.hash);
+    }
+
+    for (size_t i{0}; i < package.size(); ++i) {
+        const auto& tx = package.at(i);
+        // We assume the package is sorted, so that we don't need to continue
+        // looking past the transaction itself.
+        if (&(*tx) == &(*ptx)) break;
+        if (possible_parents.count(tx->GetHash())) {
+            in_package_parents.push_back(i);
+        }
+    }
+    return in_package_parents;
+}
+
+/** Helper for PackageV3Checks, storing info for a mempool or package parent. */
+struct ParentInfo {
+    /** Txid used to identify this parent by prevout */
+    const Txid& m_txid;
+    /** Wtxid used for debug string */
+    const Wtxid& m_wtxid;
+    /** nVersion used to check inheritance of v3 and non-v3 */
+    decltype(CTransaction::nVersion) m_version;
+    /** If parent is in mempool, whether it has any descendants in mempool. */
+    bool m_has_mempool_descendant;
+
+    ParentInfo() = delete;
+    ParentInfo(const Txid& txid, const Wtxid& wtxid, decltype(CTransaction::nVersion) version, bool has_mempool_descendant) :
+        m_txid{txid}, m_wtxid{wtxid}, m_version{version},
+        m_has_mempool_descendant{has_mempool_descendant}
+    {}
+};
+
+std::optional<std::string> PackageV3Checks(const CTransactionRef& ptx, int64_t vsize,
+                                           const Package& package,
+                                           const CTxMemPool::setEntries& mempool_ancestors)
+{
+    // This function is specialized for these limits, and must be reimplemented if they ever change.
+    static_assert(V3_ANCESTOR_LIMIT == 2);
+    static_assert(V3_DESCENDANT_LIMIT == 2);
+
+    const auto in_package_parents{FindInPackageParents(package, ptx)};
+
+    // Now we have all ancestors, so we can start checking v3 rules.
+    if (ptx->nVersion == 3) {
+        if (mempool_ancestors.size() + in_package_parents.size() + 1 > V3_ANCESTOR_LIMIT) {
+            return strprintf("tx %s (wtxid=%s) would have too many ancestors",
+                             ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString());
+        }
+
+        const bool has_parent{mempool_ancestors.size() + in_package_parents.size() > 0};
+        if (has_parent) {
+            // A v3 child cannot be too large.
+            if (vsize > V3_CHILD_MAX_VSIZE) {
+                return strprintf("v3 child tx %s (wtxid=%s) is too big: %u > %u virtual bytes",
+                                 ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(),
+                                 vsize, V3_CHILD_MAX_VSIZE);
+            }
+
+            const auto parent_info = [&] {
+                if (mempool_ancestors.size() > 0) {
+                    // There's a parent in the mempool.
+                    auto& mempool_parent = *mempool_ancestors.begin();
+                    Assume(mempool_parent->GetCountWithDescendants() == 1);
+                    return ParentInfo{mempool_parent->GetTx().GetHash(),
+                                      mempool_parent->GetTx().GetWitnessHash(),
+                                      mempool_parent->GetTx().nVersion,
+                                      /*has_mempool_descendant=*/mempool_parent->GetCountWithDescendants() > 1};
+                } else {
+                    // Ancestor must be in the package. Find it.
+                    auto& parent_index = in_package_parents.front();
+                    auto& package_parent = package.at(parent_index);
+                    return ParentInfo{package_parent->GetHash(),
+                                      package_parent->GetWitnessHash(),
+                                      package_parent->nVersion,
+                                      /*has_mempool_descendant=*/false};
+                }
+            }();
+
+            // If there is a parent, it must have the right version.
+            if (parent_info.m_version != 3) {
+                return strprintf("v3 tx %s (wtxid=%s) cannot spend from non-v3 tx %s (wtxid=%s)",
+                                 ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(),
+                                 parent_info.m_txid.ToString(), parent_info.m_wtxid.ToString());
+            }
+
+            for (const auto& package_tx : package) {
+                // Skip same tx.
+                if (&(*package_tx) == &(*ptx)) continue;
+
+                for (auto& input : package_tx->vin) {
+                    // Fail if we find another tx with the same parent. We don't check whether the
+                    // sibling is to-be-replaced (done in SingleV3Checks) because these transactions
+                    // are within the same package.
+                    if (input.prevout.hash == parent_info.m_txid) {
+                        return strprintf("tx %s (wtxid=%s) would exceed descendant count limit",
+                                         parent_info.m_txid.ToString(),
+                                         parent_info.m_wtxid.ToString());
+                    }
+
+                    // This tx can't have both a parent and an in-package child.
+                    if (input.prevout.hash == ptx->GetHash()) {
+                        return strprintf("tx %s (wtxid=%s) would have too many ancestors",
+                                         package_tx->GetHash().ToString(), package_tx->GetWitnessHash().ToString());
+                    }
+                }
+            }
+
+            // It shouldn't be possible to have any mempool siblings at this point. SingleV3Checks
+            // catches mempool siblings. Also, if the package consists of connected transactions,
+            // any tx having a mempool ancestor would mean the package exceeds ancestor limits.
+            if (!Assume(!parent_info.m_has_mempool_descendant)) {
+                return strprintf("tx %u would exceed descendant count limit", parent_info.m_wtxid.ToString());
+            }
+        }
+    } else {
+        // Non-v3 transactions cannot have v3 parents.
+        for (auto it : mempool_ancestors) {
+            if (it->GetTx().nVersion == 3) {
+                return strprintf("non-v3 tx %s (wtxid=%s) cannot spend from v3 tx %s (wtxid=%s)",
+                                 ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(),
+                                 it->GetSharedTx()->GetHash().ToString(), it->GetSharedTx()->GetWitnessHash().ToString());
+            }
+        }
+        for (const auto& index: in_package_parents) {
+            if (package.at(index)->nVersion == 3) {
+                return strprintf("non-v3 tx %s (wtxid=%s) cannot spend from v3 tx %s (wtxid=%s)",
+                                 ptx->GetHash().ToString(),
+                                 ptx->GetWitnessHash().ToString(),
+                                 package.at(index)->GetHash().ToString(),
+                                 package.at(index)->GetWitnessHash().ToString());
+            }
+        }
+    }
+    return std::nullopt;
+}
+
+std::optional<std::string> SingleV3Checks(const CTransactionRef& ptx,
+                                          const CTxMemPool::setEntries& mempool_ancestors,
+                                          const std::set<Txid>& direct_conflicts,
+                                          int64_t vsize)
+{
+    // Check v3 and non-v3 inheritance.
+    for (const auto& entry : mempool_ancestors) {
+        if (ptx->nVersion != 3 && entry->GetTx().nVersion == 3) {
+            return strprintf("non-v3 tx %s (wtxid=%s) cannot spend from v3 tx %s (wtxid=%s)",
+                             ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(),
+                             entry->GetSharedTx()->GetHash().ToString(), entry->GetSharedTx()->GetWitnessHash().ToString());
+        } else if (ptx->nVersion == 3 && entry->GetTx().nVersion != 3) {
+            return strprintf("v3 tx %s (wtxid=%s) cannot spend from non-v3 tx %s (wtxid=%s)",
+                             ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(),
+                             entry->GetSharedTx()->GetHash().ToString(), entry->GetSharedTx()->GetWitnessHash().ToString());
+        }
+    }
+
+    // This function is specialized for these limits, and must be reimplemented if they ever change.
+    static_assert(V3_ANCESTOR_LIMIT == 2);
+    static_assert(V3_DESCENDANT_LIMIT == 2);
+
+    // The rest of the rules only apply to transactions with nVersion=3.
+    if (ptx->nVersion != 3) return std::nullopt;
+
+    // Check that V3_ANCESTOR_LIMIT would not be violated, including both in-package and in-mempool.
+    if (mempool_ancestors.size() + 1 > V3_ANCESTOR_LIMIT) {
+        return strprintf("tx %s (wtxid=%s) would have too many ancestors",
+                         ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString());
+    }
+
+    // Remaining checks only pertain to transactions with unconfirmed ancestors.
+    if (mempool_ancestors.size() > 0) {
+        // If this transaction spends V3 parents, it cannot be too large.
+        if (vsize > V3_CHILD_MAX_VSIZE) {
+            return strprintf("v3 child tx %s (wtxid=%s) is too big: %u > %u virtual bytes",
+                             ptx->GetHash().ToString(), ptx->GetWitnessHash().ToString(), vsize, V3_CHILD_MAX_VSIZE);
+        }
+
+        // Check the descendant counts of in-mempool ancestors.
+        const auto& parent_entry = *mempool_ancestors.begin();
+        // If there are any ancestors, this is the only child allowed. The parent cannot have any
+        // other descendants. We handle the possibility of multiple children as that case is
+        // possible through a reorg.
+        const auto& children = parent_entry->GetMemPoolChildrenConst();
+        // Don't double-count a transaction that is going to be replaced. This logic assumes that
+        // any descendant of the V3 transaction is a direct child, which makes sense because a V3
+        // transaction can only have 1 descendant.
+        const bool child_will_be_replaced = !children.empty() &&
+            std::any_of(children.cbegin(), children.cend(),
+                [&direct_conflicts](const CTxMemPoolEntry& child){return direct_conflicts.count(child.GetTx().GetHash()) > 0;});
+        if (parent_entry->GetCountWithDescendants() + 1 > V3_DESCENDANT_LIMIT && !child_will_be_replaced) {
+            return strprintf("tx %u (wtxid=%s) would exceed descendant count limit",
+                             parent_entry->GetSharedTx()->GetHash().ToString(),
+                             parent_entry->GetSharedTx()->GetWitnessHash().ToString());
+        }
+    }
+    return std::nullopt;
+}
diff --git a/src/policy/v3_policy.h b/src/policy/v3_policy.h
new file mode 100644
index 0000000000..9e871915e5
--- /dev/null
+++ b/src/policy/v3_policy.h
@@ -0,0 +1,83 @@
+// Copyright (c) 2022 The Bitcoin Core developers
+// Distributed under the MIT software license, see the accompanying
+// file COPYING or http://www.opensource.org/licenses/mit-license.php.
+
+#ifndef BITCOIN_POLICY_V3_POLICY_H
+#define BITCOIN_POLICY_V3_POLICY_H
+
+#include <consensus/amount.h>
+#include <policy/packages.h>
+#include <policy/policy.h>
+#include <primitives/transaction.h>
+#include <txmempool.h>
+#include <util/result.h>
+
+#include <set>
+#include <string>
+
+// This module enforces rules for transactions with nVersion=3 ("v3 transactions") which help make
+// RBF abilities more robust.
+
+// v3 only allows 1 parent and 1 child when unconfirmed.
+/** Maximum number of transactions including an unconfirmed tx and its descendants. */
+static constexpr unsigned int V3_DESCENDANT_LIMIT{2};
+/** Maximum number of transactions including a V3 tx and all its mempool ancestors. */
+static constexpr unsigned int V3_ANCESTOR_LIMIT{2};
+
+/** Maximum sigop-adjusted virtual size of a tx which spends from an unconfirmed v3 transaction. */
+static constexpr int64_t V3_CHILD_MAX_VSIZE{1000};
+// These limits are within the default ancestor/descendant limits.
+static_assert(V3_CHILD_MAX_VSIZE + MAX_STANDARD_TX_WEIGHT / WITNESS_SCALE_FACTOR <= DEFAULT_ANCESTOR_SIZE_LIMIT_KVB * 1000);
+static_assert(V3_CHILD_MAX_VSIZE + MAX_STANDARD_TX_WEIGHT / WITNESS_SCALE_FACTOR <= DEFAULT_DESCENDANT_SIZE_LIMIT_KVB * 1000);
+
+/** Must be called for every transaction, even if not v3. Not strictly necessary for transactions
+ * accepted through AcceptMultipleTransactions.
+ *
+ * Checks the following rules:
+ * 1. A v3 tx must only have v3 unconfirmed ancestors.
+ * 2. A non-v3 tx must only have non-v3 unconfirmed ancestors.
+ * 3. A v3's ancestor set, including itself, must be within V3_ANCESTOR_LIMIT.
+ * 4. A v3's descendant set, including itself, must be within V3_DESCENDANT_LIMIT.
+ * 5. If a v3 tx has any unconfirmed ancestors, the tx's sigop-adjusted vsize must be within
+ * V3_CHILD_MAX_VSIZE.
+ *
+ *
+ * @param[in]   mempool_ancestors       The in-mempool ancestors of ptx.
+ * @param[in]   direct_conflicts        In-mempool transactions this tx conflicts with. These conflicts
+ *                                      are used to more accurately calculate the resulting descendant
+ *                                      count of in-mempool ancestors.
+ * @param[in]   vsize                   The sigop-adjusted virtual size of ptx.
+ *
+ * @returns debug string if an error occurs, std::nullopt otherwise.
+ */
+std::optional<std::string> SingleV3Checks(const CTransactionRef& ptx,
+                                          const CTxMemPool::setEntries& mempool_ancestors,
+                                          const std::set<Txid>& direct_conflicts,
+                                          int64_t vsize);
+
+/** Must be called for every transaction that is submitted within a package, even if not v3.
+ *
+ * For each transaction in a package:
+ * If it's not a v3 transaction, verify it has no direct v3 parents in the mempool or the package.
+
+ * If it is a v3 transaction, verify that any direct parents in the mempool or the package are v3.
+ * If such a parent exists, verify that parent has no other children in the package or the mempool,
+ * and that the transaction itself has no children in the package.
+ *
+ * If any v3 violations in the package exist, this test will fail for one of them:
+ * - if a v3 transaction T has a parent in the mempool and a child in the package, then PV3C(T) will fail
+ * - if a v3 transaction T has a parent in the package and a child in the package, then PV3C(T) will fail
+ * - if a v3 transaction T and a v3 (sibling) transaction U have some parent in the mempool,
+ *   then PV3C(T) and PV3C(U) will fail
+ * - if a v3 transaction T and a v3 (sibling) transaction U have some parent in the package,
+ *   then PV3C(T) and PV3C(U) will fail
+ * - if a v3 transaction T has a parent P and a grandparent G in the package, then
+ *   PV3C(P) will fail (though PV3C(G) and PV3C(T) might succeed).
+ *
+ * @returns debug string if an error occurs, std::nullopt otherwise.
+ * */
+std::optional<std::string> PackageV3Checks(const CTransactionRef& ptx, int64_t vsize,
+                                           const Package& package,
+                                           const CTxMemPool::setEntries& mempool_ancestors);
+
+#endif // BITCOIN_POLICY_V3_POLICY_H
diff --git a/src/rpc/mempool.cpp b/src/rpc/mempool.cpp
index 04d2e68939..c1753a1f6e 100644
--- a/src/rpc/mempool.cpp
+++ b/src/rpc/mempool.cpp
@@ -199,7 +199,7 @@ static RPCHelpMan testmempoolaccept()
                 result_inner.pushKV("txid", tx->GetHash().GetHex());
                 result_inner.pushKV("wtxid", tx->GetWitnessHash().GetHex());
                 if (package_result.m_state.GetResult() == PackageValidationResult::PCKG_POLICY) {
-                    result_inner.pushKV("package-error", package_result.m_state.GetRejectReason());
+                    result_inner.pushKV("package-error", package_result.m_state.ToString());
                 }
                 auto it = package_result.m_tx_results.find(tx->GetWitnessHash());
                 if (exit_early || it == package_result.m_tx_results.end()) {
@@ -907,7 +907,7 @@ static RPCHelpMan submitpackage()
                 case PackageValidationResult::PCKG_TX:
                 {
                     // Package-wide error we want to return, but we also want to return individual responses
-                    package_msg = package_result.m_state.GetRejectReason();
+                    package_msg = package_result.m_state.ToString();
                     CHECK_NONFATAL(package_result.m_tx_results.size() == txns.size() ||
                             package_result.m_tx_results.empty());
                     break;
diff --git a/src/test/fuzz/package_eval.cpp b/src/test/fuzz/package_eval.cpp
index 5a08d0ff44..9e658e0ced 100644
--- a/src/test/fuzz/package_eval.cpp
+++ b/src/test/fuzz/package_eval.cpp
@@ -6,6 +6,7 @@
 #include <node/context.h>
 #include <node/mempool_args.h>
 #include <node/miner.h>
+#include <policy/v3_policy.h>
 #include <test/fuzz/FuzzedDataProvider.h>
 #include <test/fuzz/fuzz.h>
 #include <test/fuzz/util.h>
@@ -119,7 +120,8 @@ CTxMemPool MakeMempool(FuzzedDataProvider& fuzzed_data_provider, const NodeConte
     mempool_opts.limits.descendant_size_vbytes = fuzzed_data_provider.ConsumeIntegralInRange<unsigned>(0, 202) * 1'000;
     mempool_opts.max_size_bytes = fuzzed_data_provider.ConsumeIntegralInRange<unsigned>(0, 200) * 1'000'000;
     mempool_opts.expiry = std::chrono::hours{fuzzed_data_provider.ConsumeIntegralInRange<unsigned>(0, 999)};
-    nBytesPerSigOp = fuzzed_data_provider.ConsumeIntegralInRange<unsigned>(1, 999);
+    // Only interested in 2 cases: sigop cost 0 or when single legacy sigop cost is >> 1KvB
+    nBytesPerSigOp = fuzzed_data_provider.ConsumeIntegralInRange<unsigned>(0, 1) * 10'000;
 
     mempool_opts.check_ratio = 1;
     mempool_opts.require_standard = fuzzed_data_provider.ConsumeBool();
@@ -171,11 +173,11 @@ FUZZ_TARGET(tx_package_eval, .init = initialize_tx_pool)
             // Create transaction to add to the mempool
             const CTransactionRef tx = [&] {
                 CMutableTransaction tx_mut;
-                tx_mut.nVersion = CTransaction::CURRENT_VERSION;
+                tx_mut.nVersion = fuzzed_data_provider.ConsumeBool() ? 3 : CTransaction::CURRENT_VERSION;
                 tx_mut.nLockTime = fuzzed_data_provider.ConsumeBool() ? 0 : fuzzed_data_provider.ConsumeIntegral<uint32_t>();
                 // Last tx will sweep all outpoints in package
                 const auto num_in = last_tx ? package_outpoints.size()  : fuzzed_data_provider.ConsumeIntegralInRange<int>(1, mempool_outpoints.size());
-                const auto num_out = fuzzed_data_provider.ConsumeIntegralInRange<int>(1, mempool_outpoints.size() * 2);
+                auto num_out = fuzzed_data_provider.ConsumeIntegralInRange<int>(1, mempool_outpoints.size() * 2);
 
                 auto& outpoints = last_tx ? package_outpoints : mempool_outpoints;
 
@@ -211,17 +213,24 @@ FUZZ_TARGET(tx_package_eval, .init = initialize_tx_pool)
                     tx_mut.vin.push_back(tx_mut.vin.back());
                 }
 
-                // Refer to a non-existant input
+                // Refer to a non-existent input
                 if (fuzzed_data_provider.ConsumeBool()) {
                     tx_mut.vin.emplace_back();
                 }
 
+                // Make a p2pk output to make sigops adjusted vsize to violate v3, potentially, which is never spent
+                if (last_tx && amount_in > 1000 && fuzzed_data_provider.ConsumeBool()) {
+                    tx_mut.vout.emplace_back(1000, CScript() << std::vector<unsigned char>(33, 0x02) << OP_CHECKSIG);
+                    // Don't add any other outputs.
+                    num_out = 1;
+                    amount_in -= 1000;
+                }
+
                 const auto amount_fee = fuzzed_data_provider.ConsumeIntegralInRange<CAmount>(0, amount_in);
                 const auto amount_out = (amount_in - amount_fee) / num_out;
                 for (int i = 0; i < num_out; ++i) {
                     tx_mut.vout.emplace_back(amount_out, P2WSH_EMPTY);
                 }
-                // TODO vary transaction sizes to catch size-related issues
                 auto tx = MakeTransactionRef(tx_mut);
                 // Restore previously removed outpoints, except in-package outpoints
                 if (!last_tx) {
@@ -261,7 +270,6 @@ FUZZ_TARGET(tx_package_eval, .init = initialize_tx_pool)
         std::set<CTransactionRef> added;
         auto txr = std::make_shared<TransactionsDelta>(added);
         RegisterSharedValidationInterface(txr);
-        const bool bypass_limits = fuzzed_data_provider.ConsumeBool();
 
         // When there are multiple transactions in the package, we call ProcessNewPackage(txs, test_accept=false)
         // and AcceptToMemoryPool(txs.back(), test_accept=true). When there is only 1 transaction, we might flip it
@@ -271,17 +279,20 @@ FUZZ_TARGET(tx_package_eval, .init = initialize_tx_pool)
         const auto result_package = WITH_LOCK(::cs_main,
                                     return ProcessNewPackage(chainstate, tx_pool, txs, /*test_accept=*/single_submit));
 
-        const auto res = WITH_LOCK(::cs_main, return AcceptToMemoryPool(chainstate, txs.back(), GetTime(), bypass_limits, /*test_accept=*/!single_submit));
-        const bool accepted = res.m_result_type == MempoolAcceptResult::ResultType::VALID;
+        // Always set bypass_limits to false because it is not supported in ProcessNewPackage and
+        // can be a source of divergence.
+        const auto res = WITH_LOCK(::cs_main, return AcceptToMemoryPool(chainstate, txs.back(), GetTime(),
+                                   /*bypass_limits=*/false, /*test_accept=*/!single_submit));
+        const bool passed = res.m_result_type == MempoolAcceptResult::ResultType::VALID;
 
         SyncWithValidationInterfaceQueue();
         UnregisterSharedValidationInterface(txr);
 
         // There is only 1 transaction in the package. We did a test-package-accept and a ATMP
         if (single_submit) {
-            Assert(accepted != added.empty());
-            Assert(accepted == res.m_state.IsValid());
-            if (accepted) {
+            Assert(passed != added.empty());
+            Assert(passed == res.m_state.IsValid());
+            if (passed) {
                 Assert(added.size() == 1);
                 Assert(txs.back() == *added.begin());
             }
@@ -295,6 +306,8 @@ FUZZ_TARGET(tx_package_eval, .init = initialize_tx_pool)
             // This is empty if it fails early checks, or "full" if transactions are looked at deeper
             Assert(result_package.m_tx_results.size() == txs.size() || result_package.m_tx_results.empty());
         }
+
+        CheckMempoolV3Invariants(tx_pool);
     }
 
     UnregisterSharedValidationInterface(outpoints_updater);
diff --git a/src/test/fuzz/tx_pool.cpp b/src/test/fuzz/tx_pool.cpp
index 8c0b0d7029..b44b528b6f 100644
--- a/src/test/fuzz/tx_pool.cpp
+++ b/src/test/fuzz/tx_pool.cpp
@@ -6,6 +6,7 @@
 #include <node/context.h>
 #include <node/mempool_args.h>
 #include <node/miner.h>
+#include <policy/v3_policy.h>
 #include <test/fuzz/FuzzedDataProvider.h>
 #include <test/fuzz/fuzz.h>
 #include <test/fuzz/util.h>
@@ -227,7 +228,7 @@ FUZZ_TARGET(tx_pool_standard, .init = initialize_tx_pool)
         // Create transaction to add to the mempool
         const CTransactionRef tx = [&] {
             CMutableTransaction tx_mut;
-            tx_mut.nVersion = CTransaction::CURRENT_VERSION;
+            tx_mut.nVersion = fuzzed_data_provider.ConsumeBool() ? 3 : CTransaction::CURRENT_VERSION;
             tx_mut.nLockTime = fuzzed_data_provider.ConsumeBool() ? 0 : fuzzed_data_provider.ConsumeIntegral<uint32_t>();
             const auto num_in = fuzzed_data_provider.ConsumeIntegralInRange<int>(1, outpoints_rbf.size());
             const auto num_out = fuzzed_data_provider.ConsumeIntegralInRange<int>(1, outpoints_rbf.size() * 2);
@@ -313,6 +314,7 @@ FUZZ_TARGET(tx_pool_standard, .init = initialize_tx_pool)
         if (accepted) {
             Assert(added.size() == 1); // For now, no package acceptance
             Assert(tx == *added.begin());
+            CheckMempoolV3Invariants(tx_pool);
         } else {
             // Do not consider rejected transaction removed
             removed.erase(tx);
@@ -405,6 +407,9 @@ FUZZ_TARGET(tx_pool, .init = initialize_tx_pool)
         const bool accepted = res.m_result_type == MempoolAcceptResult::ResultType::VALID;
         if (accepted) {
             txids.push_back(tx->GetHash());
+            // Only check fees if accepted and not bypass_limits, otherwise it's not guaranteed that
+            // trimming has happened for this tx and previous iterations.
+            CheckMempoolV3Invariants(tx_pool);
         }
     }
     Finish(fuzzed_data_provider, tx_pool, chainstate);
diff --git a/src/test/rbf_tests.cpp b/src/test/rbf_tests.cpp
index fb6a3614c0..e6c135eed9 100644
--- a/src/test/rbf_tests.cpp
+++ b/src/test/rbf_tests.cpp
@@ -135,8 +135,6 @@ BOOST_FIXTURE_TEST_CASE(rbf_helper_functions, TestChain100Setup)
     // Tests for EntriesAndTxidsDisjoint
     BOOST_CHECK(EntriesAndTxidsDisjoint(empty_set, {tx1->GetHash()}, unused_txid) == std::nullopt);
     BOOST_CHECK(EntriesAndTxidsDisjoint(set_12_normal, {tx3->GetHash()}, unused_txid) == std::nullopt);
-    // EntriesAndTxidsDisjoint uses txids, not wtxids.
-    BOOST_CHECK(EntriesAndTxidsDisjoint({entry2}, {tx2->GetWitnessHash()}, unused_txid) == std::nullopt);
     BOOST_CHECK(EntriesAndTxidsDisjoint({entry2}, {tx2->GetHash()}, unused_txid).has_value());
     BOOST_CHECK(EntriesAndTxidsDisjoint(set_12_normal, {tx1->GetHash()}, unused_txid).has_value());
     BOOST_CHECK(EntriesAndTxidsDisjoint(set_12_normal, {tx2->GetHash()}, unused_txid).has_value());
diff --git a/src/test/transaction_tests.cpp b/src/test/transaction_tests.cpp
index d1cb2531aa..e6cf64611e 100644
--- a/src/test/transaction_tests.cpp
+++ b/src/test/transaction_tests.cpp
@@ -786,7 +786,7 @@ BOOST_AUTO_TEST_CASE(test_IsStandard)
     t.nVersion = 0;
     CheckIsNotStandard(t, "version");
 
-    t.nVersion = 3;
+    t.nVersion = TX_MAX_STANDARD_VERSION + 1;
     CheckIsNotStandard(t, "version");
 
     // Allowed nVersion
diff --git a/src/test/txvalidation_tests.cpp b/src/test/txvalidation_tests.cpp
index ecf0889711..98d5e892f9 100644
--- a/src/test/txvalidation_tests.cpp
+++ b/src/test/txvalidation_tests.cpp
@@ -4,11 +4,14 @@
 
 #include <consensus/validation.h>
 #include <key_io.h>
+#include <policy/v3_policy.h>
 #include <policy/packages.h>
 #include <policy/policy.h>
 #include <primitives/transaction.h>
+#include <random.h>
 #include <script/script.h>
 #include <test/util/setup_common.h>
+#include <test/util/txmempool.h>
 #include <validation.h>
 
 #include <boost/test/unit_test.hpp>
@@ -48,4 +51,290 @@ BOOST_FIXTURE_TEST_CASE(tx_mempool_reject_coinbase, TestChain100Setup)
     BOOST_CHECK_EQUAL(result.m_state.GetRejectReason(), "coinbase");
     BOOST_CHECK(result.m_state.GetResult() == TxValidationResult::TX_CONSENSUS);
 }
+
+// Generate a number of random, nonexistent outpoints.
+static inline std::vector<COutPoint> random_outpoints(size_t num_outpoints) {
+    std::vector<COutPoint> outpoints;
+    for (size_t i{0}; i < num_outpoints; ++i) {
+        outpoints.emplace_back(Txid::FromUint256(GetRandHash()), 0);
+    }
+    return outpoints;
+}
+
+static inline std::vector<CPubKey> random_keys(size_t num_keys) {
+    std::vector<CPubKey> keys;
+    keys.reserve(num_keys);
+    for (size_t i{0}; i < num_keys; ++i) {
+        CKey key;
+        key.MakeNewKey(true);
+        keys.emplace_back(key.GetPubKey());
+    }
+    return keys;
+}
+
+// Creates a placeholder tx (not valid) with 25 outputs. Specify the nVersion and the inputs.
+static inline CTransactionRef make_tx(const std::vector<COutPoint>& inputs, int32_t version)
+{
+    CMutableTransaction mtx = CMutableTransaction{};
+    mtx.nVersion = version;
+    mtx.vin.resize(inputs.size());
+    mtx.vout.resize(25);
+    for (size_t i{0}; i < inputs.size(); ++i) {
+        mtx.vin[i].prevout = inputs[i];
+    }
+    for (auto i{0}; i < 25; ++i) {
+        mtx.vout[i].scriptPubKey = CScript() << OP_TRUE;
+        mtx.vout[i].nValue = 10000;
+    }
+    return MakeTransactionRef(mtx);
+}
+
+BOOST_FIXTURE_TEST_CASE(version3_tests, RegTestingSetup)
+{
+    // Test V3 policy helper functions
+    CTxMemPool& pool = *Assert(m_node.mempool);
+    LOCK2(cs_main, pool.cs);
+    TestMemPoolEntryHelper entry;
+    std::set<Txid> empty_conflicts_set;
+    CTxMemPool::setEntries empty_ancestors;
+
+    auto mempool_tx_v3 = make_tx(random_outpoints(1), /*version=*/3);
+    pool.addUnchecked(entry.FromTx(mempool_tx_v3));
+    auto mempool_tx_v2 = make_tx(random_outpoints(1), /*version=*/2);
+    pool.addUnchecked(entry.FromTx(mempool_tx_v2));
+    // Default values.
+    CTxMemPool::Limits m_limits{};
+
+    // Cannot spend from an unconfirmed v3 transaction unless this tx is also v3.
+    {
+        // mempool_tx_v3
+        //      ^
+        // tx_v2_from_v3
+        auto tx_v2_from_v3 = make_tx({COutPoint{mempool_tx_v3->GetHash(), 0}}, /*version=*/2);
+        auto ancestors_v2_from_v3{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v2_from_v3), m_limits)};
+        const auto expected_error_str{strprintf("non-v3 tx %s (wtxid=%s) cannot spend from v3 tx %s (wtxid=%s)",
+            tx_v2_from_v3->GetHash().ToString(), tx_v2_from_v3->GetWitnessHash().ToString(),
+            mempool_tx_v3->GetHash().ToString(), mempool_tx_v3->GetWitnessHash().ToString())};
+        BOOST_CHECK(*SingleV3Checks(tx_v2_from_v3, *ancestors_v2_from_v3, empty_conflicts_set, GetVirtualTransactionSize(*tx_v2_from_v3)) == expected_error_str);
+
+        Package package_v3_v2{mempool_tx_v3, tx_v2_from_v3};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v2_from_v3, GetVirtualTransactionSize(*tx_v2_from_v3), package_v3_v2, empty_ancestors), expected_error_str);
+
+        // mempool_tx_v3  mempool_tx_v2
+        //            ^    ^
+        //    tx_v2_from_v2_and_v3
+        auto tx_v2_from_v2_and_v3 = make_tx({COutPoint{mempool_tx_v3->GetHash(), 0}, COutPoint{mempool_tx_v2->GetHash(), 0}}, /*version=*/2);
+        auto ancestors_v2_from_both{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v2_from_v2_and_v3), m_limits)};
+        const auto expected_error_str_2{strprintf("non-v3 tx %s (wtxid=%s) cannot spend from v3 tx %s (wtxid=%s)",
+            tx_v2_from_v2_and_v3->GetHash().ToString(), tx_v2_from_v2_and_v3->GetWitnessHash().ToString(),
+            mempool_tx_v3->GetHash().ToString(), mempool_tx_v3->GetWitnessHash().ToString())};
+        BOOST_CHECK(*SingleV3Checks(tx_v2_from_v2_and_v3, *ancestors_v2_from_both, empty_conflicts_set, GetVirtualTransactionSize(*tx_v2_from_v2_and_v3))
+                    == expected_error_str_2);
+
+        Package package_v3_v2_v2{mempool_tx_v3, mempool_tx_v2, tx_v2_from_v2_and_v3};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v2_from_v2_and_v3, GetVirtualTransactionSize(*tx_v2_from_v2_and_v3), package_v3_v2_v2, empty_ancestors), expected_error_str_2);
+    }
+
+    // V3 cannot spend from an unconfirmed non-v3 transaction.
+    {
+        // mempool_tx_v2
+        //      ^
+        // tx_v3_from_v2
+        auto tx_v3_from_v2 = make_tx({COutPoint{mempool_tx_v2->GetHash(), 0}}, /*version=*/3);
+        auto ancestors_v3_from_v2{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_from_v2), m_limits)};
+        const auto expected_error_str{strprintf("v3 tx %s (wtxid=%s) cannot spend from non-v3 tx %s (wtxid=%s)",
+            tx_v3_from_v2->GetHash().ToString(), tx_v3_from_v2->GetWitnessHash().ToString(),
+            mempool_tx_v2->GetHash().ToString(), mempool_tx_v2->GetWitnessHash().ToString())};
+        BOOST_CHECK(*SingleV3Checks(tx_v3_from_v2, *ancestors_v3_from_v2,  empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_from_v2)) == expected_error_str);
+
+        Package package_v2_v3{mempool_tx_v2, tx_v3_from_v2};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v3_from_v2, GetVirtualTransactionSize(*tx_v3_from_v2), package_v2_v3, empty_ancestors), expected_error_str);
+
+        // mempool_tx_v3  mempool_tx_v2
+        //            ^    ^
+        //    tx_v3_from_v2_and_v3
+        auto tx_v3_from_v2_and_v3 = make_tx({COutPoint{mempool_tx_v3->GetHash(), 0}, COutPoint{mempool_tx_v2->GetHash(), 0}}, /*version=*/3);
+        auto ancestors_v3_from_both{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_from_v2_and_v3), m_limits)};
+        const auto expected_error_str_2{strprintf("v3 tx %s (wtxid=%s) cannot spend from non-v3 tx %s (wtxid=%s)",
+            tx_v3_from_v2_and_v3->GetHash().ToString(), tx_v3_from_v2_and_v3->GetWitnessHash().ToString(),
+            mempool_tx_v2->GetHash().ToString(), mempool_tx_v2->GetWitnessHash().ToString())};
+        BOOST_CHECK(*SingleV3Checks(tx_v3_from_v2_and_v3, *ancestors_v3_from_both, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_from_v2_and_v3))
+                    == expected_error_str_2);
+
+        // tx_v3_from_v2_and_v3 also violates V3_ANCESTOR_LIMIT.
+        const auto expected_error_str_3{strprintf("tx %s (wtxid=%s) would have too many ancestors",
+            tx_v3_from_v2_and_v3->GetHash().ToString(), tx_v3_from_v2_and_v3->GetWitnessHash().ToString())};
+        Package package_v3_v2_v3{mempool_tx_v3, mempool_tx_v2, tx_v3_from_v2_and_v3};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v3_from_v2_and_v3, GetVirtualTransactionSize(*tx_v3_from_v2_and_v3), package_v3_v2_v3, empty_ancestors), expected_error_str_3);
+    }
+    // V3 from V3 is ok, and non-V3 from non-V3 is ok.
+    {
+        // mempool_tx_v3
+        //      ^
+        // tx_v3_from_v3
+        auto tx_v3_from_v3 = make_tx({COutPoint{mempool_tx_v3->GetHash(), 0}}, /*version=*/3);
+        auto ancestors_v3{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_from_v3), m_limits)};
+        BOOST_CHECK(SingleV3Checks(tx_v3_from_v3, *ancestors_v3, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_from_v3))
+                    == std::nullopt);
+
+        Package package_v3_v3{mempool_tx_v3, tx_v3_from_v3};
+        BOOST_CHECK(PackageV3Checks(tx_v3_from_v3, GetVirtualTransactionSize(*tx_v3_from_v3), package_v3_v3, empty_ancestors) == std::nullopt);
+
+        // mempool_tx_v2
+        //      ^
+        // tx_v2_from_v2
+        auto tx_v2_from_v2 = make_tx({COutPoint{mempool_tx_v2->GetHash(), 0}}, /*version=*/2);
+        auto ancestors_v2{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v2_from_v2), m_limits)};
+        BOOST_CHECK(SingleV3Checks(tx_v2_from_v2, *ancestors_v2, empty_conflicts_set, GetVirtualTransactionSize(*tx_v2_from_v2))
+                    == std::nullopt);
+
+        Package package_v2_v2{mempool_tx_v2, tx_v2_from_v2};
+        BOOST_CHECK(PackageV3Checks(tx_v2_from_v2, GetVirtualTransactionSize(*tx_v2_from_v2), package_v2_v2, empty_ancestors) == std::nullopt);
+    }
+
+    // Tx spending v3 cannot have too many mempool ancestors
+    // Configuration where the tx has multiple direct parents.
+    {
+        Package package_multi_parents;
+        std::vector<COutPoint> mempool_outpoints;
+        mempool_outpoints.emplace_back(mempool_tx_v3->GetHash(), 0);
+        package_multi_parents.emplace_back(mempool_tx_v3);
+        for (size_t i{0}; i < 2; ++i) {
+            auto mempool_tx = make_tx(random_outpoints(i + 1), /*version=*/3);
+            pool.addUnchecked(entry.FromTx(mempool_tx));
+            mempool_outpoints.emplace_back(mempool_tx->GetHash(), 0);
+            package_multi_parents.emplace_back(mempool_tx);
+        }
+        auto tx_v3_multi_parent = make_tx(mempool_outpoints, /*version=*/3);
+        package_multi_parents.emplace_back(tx_v3_multi_parent);
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_multi_parent), m_limits)};
+        BOOST_CHECK_EQUAL(ancestors->size(), 3);
+        const auto expected_error_str{strprintf("tx %s (wtxid=%s) would have too many ancestors",
+            tx_v3_multi_parent->GetHash().ToString(), tx_v3_multi_parent->GetWitnessHash().ToString())};
+        BOOST_CHECK_EQUAL(*SingleV3Checks(tx_v3_multi_parent, *ancestors, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_multi_parent)),
+                          expected_error_str);
+
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v3_multi_parent, GetVirtualTransactionSize(*tx_v3_multi_parent), package_multi_parents, empty_ancestors),
+                          expected_error_str);
+    }
+
+    // Configuration where the tx is in a multi-generation chain.
+    {
+        Package package_multi_gen;
+        CTransactionRef middle_tx;
+        auto last_outpoint{random_outpoints(1)[0]};
+        for (size_t i{0}; i < 2; ++i) {
+            auto mempool_tx = make_tx({last_outpoint}, /*version=*/3);
+            pool.addUnchecked(entry.FromTx(mempool_tx));
+            last_outpoint = COutPoint{mempool_tx->GetHash(), 0};
+            package_multi_gen.emplace_back(mempool_tx);
+            if (i == 1) middle_tx = mempool_tx;
+        }
+        auto tx_v3_multi_gen = make_tx({last_outpoint}, /*version=*/3);
+        package_multi_gen.emplace_back(tx_v3_multi_gen);
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_multi_gen), m_limits)};
+        const auto expected_error_str{strprintf("tx %s (wtxid=%s) would have too many ancestors",
+            tx_v3_multi_gen->GetHash().ToString(), tx_v3_multi_gen->GetWitnessHash().ToString())};
+        BOOST_CHECK_EQUAL(*SingleV3Checks(tx_v3_multi_gen, *ancestors, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_multi_gen)),
+                          expected_error_str);
+
+        // Middle tx is what triggers a failure for the grandchild:
+        BOOST_CHECK_EQUAL(*PackageV3Checks(middle_tx, GetVirtualTransactionSize(*middle_tx), package_multi_gen, empty_ancestors), expected_error_str);
+        BOOST_CHECK(PackageV3Checks(tx_v3_multi_gen, GetVirtualTransactionSize(*tx_v3_multi_gen), package_multi_gen, empty_ancestors) == std::nullopt);
+    }
+
+    // Tx spending v3 cannot be too large in virtual size.
+    auto many_inputs{random_outpoints(100)};
+    many_inputs.emplace_back(mempool_tx_v3->GetHash(), 0);
+    {
+        auto tx_v3_child_big = make_tx(many_inputs, /*version=*/3);
+        const auto vsize{GetVirtualTransactionSize(*tx_v3_child_big)};
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_child_big), m_limits)};
+        const auto expected_error_str{strprintf("v3 child tx %s (wtxid=%s) is too big: %u > %u virtual bytes",
+            tx_v3_child_big->GetHash().ToString(), tx_v3_child_big->GetWitnessHash().ToString(), vsize, V3_CHILD_MAX_VSIZE)};
+        BOOST_CHECK_EQUAL(*SingleV3Checks(tx_v3_child_big, *ancestors, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_child_big)),
+                          expected_error_str);
+
+        Package package_child_big{mempool_tx_v3, tx_v3_child_big};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v3_child_big, GetVirtualTransactionSize(*tx_v3_child_big), package_child_big, empty_ancestors),
+                          expected_error_str);
+    }
+
+    // Tx spending v3 cannot have too many sigops.
+    // This child has 10 P2WSH multisig inputs.
+    auto multisig_outpoints{random_outpoints(10)};
+    multisig_outpoints.emplace_back(mempool_tx_v3->GetHash(), 0);
+    auto keys{random_keys(2)};
+    CScript script_multisig;
+    script_multisig << OP_1;
+    for (const auto& key : keys) {
+        script_multisig << ToByteVector(key);
+    }
+    script_multisig << OP_2 << OP_CHECKMULTISIG;
+    {
+        CMutableTransaction mtx_many_sigops = CMutableTransaction{};
+        mtx_many_sigops.nVersion = 3;
+        for (const auto& outpoint : multisig_outpoints) {
+            mtx_many_sigops.vin.emplace_back(outpoint);
+            mtx_many_sigops.vin.back().scriptWitness.stack.emplace_back(script_multisig.begin(), script_multisig.end());
+        }
+        mtx_many_sigops.vout.resize(1);
+        mtx_many_sigops.vout.back().scriptPubKey = CScript() << OP_TRUE;
+        mtx_many_sigops.vout.back().nValue = 10000;
+        auto tx_many_sigops{MakeTransactionRef(mtx_many_sigops)};
+
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_many_sigops), m_limits)};
+        // legacy uses fAccurate = false, and the maximum number of multisig keys is used
+        const int64_t total_sigops{static_cast<int64_t>(tx_many_sigops->vin.size()) * static_cast<int64_t>(script_multisig.GetSigOpCount(/*fAccurate=*/false))};
+        BOOST_CHECK_EQUAL(total_sigops, tx_many_sigops->vin.size() * MAX_PUBKEYS_PER_MULTISIG);
+        const int64_t bip141_vsize{GetVirtualTransactionSize(*tx_many_sigops)};
+        // Weight limit is not reached...
+        BOOST_CHECK(SingleV3Checks(tx_many_sigops, *ancestors, empty_conflicts_set, bip141_vsize) == std::nullopt);
+        // ...but sigop limit is.
+        const auto expected_error_str{strprintf("v3 child tx %s (wtxid=%s) is too big: %u > %u virtual bytes",
+            tx_many_sigops->GetHash().ToString(), tx_many_sigops->GetWitnessHash().ToString(),
+            total_sigops * DEFAULT_BYTES_PER_SIGOP / WITNESS_SCALE_FACTOR, V3_CHILD_MAX_VSIZE)};
+        BOOST_CHECK_EQUAL(*SingleV3Checks(tx_many_sigops, *ancestors, empty_conflicts_set,
+                                        GetVirtualTransactionSize(*tx_many_sigops, /*nSigOpCost=*/total_sigops, /*bytes_per_sigop=*/ DEFAULT_BYTES_PER_SIGOP)),
+                    expected_error_str);
+
+        Package package_child_sigops{mempool_tx_v3, tx_many_sigops};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_many_sigops, total_sigops * DEFAULT_BYTES_PER_SIGOP / WITNESS_SCALE_FACTOR, package_child_sigops, empty_ancestors),
+                          expected_error_str);
+    }
+
+    // Parent + child with v3 in the mempool. Child is allowed as long as it is under V3_CHILD_MAX_VSIZE.
+    auto tx_mempool_v3_child = make_tx({COutPoint{mempool_tx_v3->GetHash(), 0}}, /*version=*/3);
+    {
+        BOOST_CHECK(GetTransactionWeight(*tx_mempool_v3_child) <= V3_CHILD_MAX_VSIZE * WITNESS_SCALE_FACTOR);
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_mempool_v3_child), m_limits)};
+        BOOST_CHECK(SingleV3Checks(tx_mempool_v3_child, *ancestors, empty_conflicts_set, GetVirtualTransactionSize(*tx_mempool_v3_child)) == std::nullopt);
+        pool.addUnchecked(entry.FromTx(tx_mempool_v3_child));
+
+        Package package_v3_1p1c{mempool_tx_v3, tx_mempool_v3_child};
+        BOOST_CHECK(PackageV3Checks(tx_mempool_v3_child, GetVirtualTransactionSize(*tx_mempool_v3_child), package_v3_1p1c, empty_ancestors) == std::nullopt);
+    }
+
+    // A v3 transaction cannot have more than 1 descendant.
+    // Configuration where tx has multiple direct children.
+    {
+        auto tx_v3_child2 = make_tx({COutPoint{mempool_tx_v3->GetHash(), 1}}, /*version=*/3);
+        auto ancestors{pool.CalculateMemPoolAncestors(entry.FromTx(tx_v3_child2), m_limits)};
+        const auto expected_error_str{strprintf("tx %s (wtxid=%s) would exceed descendant count limit",
+            mempool_tx_v3->GetHash().ToString(), mempool_tx_v3->GetWitnessHash().ToString())};
+        BOOST_CHECK_EQUAL(*SingleV3Checks(tx_v3_child2, *ancestors, empty_conflicts_set, GetVirtualTransactionSize(*tx_v3_child2)),
+                          expected_error_str);
+        // If replacing the child, make sure there is no double-counting.
+        BOOST_CHECK(SingleV3Checks(tx_v3_child2, *ancestors, {tx_mempool_v3_child->GetHash()}, GetVirtualTransactionSize(*tx_v3_child2))
+                    == std::nullopt);
+
+        Package package_v3_1p2c{mempool_tx_v3, tx_mempool_v3_child, tx_v3_child2};
+        BOOST_CHECK_EQUAL(*PackageV3Checks(tx_v3_child2, GetVirtualTransactionSize(*tx_v3_child2), package_v3_1p2c, empty_ancestors),
+                          expected_error_str);
+    }
+
+    // Configuration where tx has multiple generations of descendants is not tested because that is
+    // equivalent to the tx with multiple generations of ancestors.
+}
+
 BOOST_AUTO_TEST_SUITE_END()
diff --git a/src/test/util/txmempool.cpp b/src/test/util/txmempool.cpp
index 379c3c9329..3b4161ddd3 100644
--- a/src/test/util/txmempool.cpp
+++ b/src/test/util/txmempool.cpp
@@ -7,6 +7,7 @@
 #include <chainparams.h>
 #include <node/context.h>
 #include <node/mempool_args.h>
+#include <policy/v3_policy.h>
 #include <txmempool.h>
 #include <util/check.h>
 #include <util/time.h>
@@ -116,3 +117,28 @@ std::optional<std::string> CheckPackageMempoolAcceptResult(const Package& txns,
     }
     return std::nullopt;
 }
+
+void CheckMempoolV3Invariants(const CTxMemPool& tx_pool)
+{
+    LOCK(tx_pool.cs);
+    for (const auto& tx_info : tx_pool.infoAll()) {
+        const auto& entry = *Assert(tx_pool.GetEntry(tx_info.tx->GetHash()));
+        if (tx_info.tx->nVersion == 3) {
+            // Check that special v3 ancestor/descendant limits and rules are always respected
+            Assert(entry.GetCountWithDescendants() <= V3_DESCENDANT_LIMIT);
+            Assert(entry.GetCountWithAncestors() <= V3_ANCESTOR_LIMIT);
+            // If this transaction has at least 1 ancestor, it's a "child" and has restricted weight.
+            if (entry.GetCountWithAncestors() > 1) {
+                Assert(entry.GetTxSize() <= V3_CHILD_MAX_VSIZE);
+                // All v3 transactions must only have v3 unconfirmed parents.
+                const auto& parents = entry.GetMemPoolParentsConst();
+                Assert(parents.begin()->get().GetSharedTx()->nVersion == 3);
+            }
+        } else if (entry.GetCountWithAncestors() > 1) {
+            // All non-v3 transactions must only have non-v3 unconfirmed parents.
+            for (const auto& parent : entry.GetMemPoolParentsConst()) {
+                Assert(parent.get().GetSharedTx()->nVersion != 3);
+            }
+        }
+    }
+}
diff --git a/src/test/util/txmempool.h b/src/test/util/txmempool.h
index a866d1ce74..b3022af7df 100644
--- a/src/test/util/txmempool.h
+++ b/src/test/util/txmempool.h
@@ -46,4 +46,14 @@ std::optional<std::string>  CheckPackageMempoolAcceptResult(const Package& txns,
                                                             const PackageMempoolAcceptResult& result,
                                                             bool expect_valid,
                                                             const CTxMemPool* mempool);
+
+/** For every transaction in tx_pool, check v3 invariants:
+ * - a v3 tx's ancestor count must be within V3_ANCESTOR_LIMIT
+ * - a v3 tx's descendant count must be within V3_DESCENDANT_LIMIT
+ * - if a v3 tx has ancestors, its sigop-adjusted vsize must be within V3_CHILD_MAX_VSIZE
+ * - any non-v3 tx must only have non-v3 parents
+ * - any v3 tx must only have v3 parents
+ *   */
+void CheckMempoolV3Invariants(const CTxMemPool& tx_pool);
+
 #endif // BITCOIN_TEST_UTIL_TXMEMPOOL_H
diff --git a/src/txmempool.cpp b/src/txmempool.cpp
index 57a86549d9..de340f6b6d 100644
--- a/src/txmempool.cpp
+++ b/src/txmempool.cpp
@@ -448,7 +448,7 @@ void CTxMemPool::addUnchecked(const CTxMemPoolEntry &entry, setEntries &setAnces
     cachedInnerUsage += entry.DynamicMemoryUsage();
 
     const CTransaction& tx = newit->GetTx();
-    std::set<uint256> setParentTransactions;
+    std::set<Txid> setParentTransactions;
     for (unsigned int i = 0; i < tx.vin.size(); i++) {
         mapNextTx.insert(std::make_pair(&tx.vin[i].prevout, &tx));
         setParentTransactions.insert(tx.vin[i].prevout.hash);
@@ -950,7 +950,7 @@ std::optional<CTxMemPool::txiter> CTxMemPool::GetIter(const uint256& txid) const
     return std::nullopt;
 }
 
-CTxMemPool::setEntries CTxMemPool::GetIterSet(const std::set<uint256>& hashes) const
+CTxMemPool::setEntries CTxMemPool::GetIterSet(const std::set<Txid>& hashes) const
 {
     CTxMemPool::setEntries ret;
     for (const auto& h : hashes) {
diff --git a/src/txmempool.h b/src/txmempool.h
index ca842632da..b98355c65f 100644
--- a/src/txmempool.h
+++ b/src/txmempool.h
@@ -521,7 +521,7 @@ public:
     /** Translate a set of hashes into a set of pool iterators to avoid repeated lookups.
      * Does not require that all of the hashes correspond to actual transactions in the mempool,
      * only returns the ones that exist. */
-    setEntries GetIterSet(const std::set<uint256>& hashes) const EXCLUSIVE_LOCKS_REQUIRED(cs);
+    setEntries GetIterSet(const std::set<Txid>& hashes) const EXCLUSIVE_LOCKS_REQUIRED(cs);
 
     /** Translate a list of hashes into a list of mempool iterators to avoid repeated lookups.
      * The nth element in txids becomes the nth element in the returned vector. If any of the txids
diff --git a/src/validation.cpp b/src/validation.cpp
index caa4ff3115..0552bde665 100644
--- a/src/validation.cpp
+++ b/src/validation.cpp
@@ -29,6 +29,7 @@
 #include <logging/timer.h>
 #include <node/blockstorage.h>
 #include <node/utxo_snapshot.h>
+#include <policy/v3_policy.h>
 #include <policy/policy.h>
 #include <policy/rbf.h>
 #include <policy/settings.h>
@@ -333,7 +334,9 @@ void Chainstate::MaybeUpdateMempoolForReorg(
     // Also updates valid entries' cached LockPoints if needed.
     // If false, the tx is still valid and its lockpoints are updated.
     // If true, the tx would be invalid in the next block; remove this entry and all of its descendants.
-    const auto filter_final_and_mature = [this](CTxMemPool::txiter it)
+    // Note that v3 rules are not applied here, so reorgs may cause violations of v3 inheritance or
+    // topology restrictions.
+    const auto filter_final_and_mature = [&](CTxMemPool::txiter it)
         EXCLUSIVE_LOCKS_REQUIRED(m_mempool->cs, ::cs_main) {
         AssertLockHeld(m_mempool->cs);
         AssertLockHeld(::cs_main);
@@ -583,7 +586,7 @@ private:
     struct Workspace {
         explicit Workspace(const CTransactionRef& ptx) : m_ptx(ptx), m_hash(ptx->GetHash()) {}
         /** Txids of mempool transactions that this transaction directly conflicts with. */
-        std::set<uint256> m_conflicts;
+        std::set<Txid> m_conflicts;
         /** Iterators to mempool entries that this transaction directly conflicts with. */
         CTxMemPool::setEntries m_iters_conflicting;
         /** Iterators to all mempool entries that would be replaced by this transaction, including
@@ -761,9 +764,12 @@ bool MemPoolAccept::PreChecks(ATMPArgs& args, Workspace& ws)
                 // check all unconfirmed ancestors; otherwise an opt-in ancestor
                 // might be replaced, causing removal of this descendant.
                 //
-                // If replaceability signaling is ignored due to node setting,
-                // replacement is always allowed.
-                if (!m_pool.m_full_rbf && !SignalsOptInRBF(*ptxConflicting)) {
+                // All V3 transactions are considered replaceable.
+                //
+                // Replaceability signaling of the original transactions may be
+                // ignored due to node setting.
+                const bool allow_rbf{m_pool.m_full_rbf || SignalsOptInRBF(*ptxConflicting) || ptxConflicting->nVersion == 3};
+                if (!allow_rbf) {
                     return state.Invalid(TxValidationResult::TX_MEMPOOL_POLICY, "txn-mempool-conflict");
                 }
 
@@ -865,7 +871,8 @@ bool MemPoolAccept::PreChecks(ATMPArgs& args, Workspace& ws)
     // while a tx could be package CPFP'd when entering the mempool, we do not have a DoS-resistant
     // method of ensuring the tx remains bumped. For example, the fee-bumping child could disappear
     // due to a replacement.
-    if (!bypass_limits && ws.m_modified_fees < m_pool.m_min_relay_feerate.GetFee(ws.m_vsize)) {
+    // The only exception is v3 transactions.
+    if (!bypass_limits && ws.m_ptx->nVersion != 3 && ws.m_modified_fees < m_pool.m_min_relay_feerate.GetFee(ws.m_vsize)) {
         // Even though this is a fee-related failure, this result is TX_MEMPOOL_POLICY, not
         // TX_RECONSIDERABLE, because it cannot be bypassed using package validation.
         return state.Invalid(TxValidationResult::TX_MEMPOOL_POLICY, "min relay fee not met",
@@ -947,6 +954,9 @@ bool MemPoolAccept::PreChecks(ATMPArgs& args, Workspace& ws)
     }
 
     ws.m_ancestors = *ancestors;
+    if (const auto err_string{SingleV3Checks(ws.m_ptx, ws.m_ancestors, ws.m_conflicts, ws.m_vsize)}) {
+        return state.Invalid(TxValidationResult::TX_MEMPOOL_POLICY, "v3-rule-violation", *err_string);
+    }
 
     // A transaction that spends outputs that would be replaced by it is invalid. Now
     // that we have the set of all ancestors we can detect this
@@ -1307,6 +1317,15 @@ PackageMempoolAcceptResult MemPoolAccept::AcceptMultipleTransactions(const std::
         m_viewmempool.PackageAddTransaction(ws.m_ptx);
     }
 
+    // At this point we have all in-mempool ancestors, and we know every transaction's vsize.
+    // Run the v3 checks on the package.
+    for (Workspace& ws : workspaces) {
+        if (auto err{PackageV3Checks(ws.m_ptx, ws.m_vsize, txns, ws.m_ancestors)}) {
+            package_state.Invalid(PackageValidationResult::PCKG_POLICY, "v3-violation", err.value());
+            return PackageMempoolAcceptResult(package_state, {});
+        }
+    }
+
     // Transactions must meet two minimum feerates: the mempool minimum fee and min relay fee.
     // For transactions consisting of exactly one child and its parents, it suffices to use the
     // package feerate (total modified fees / total virtual size) to check this requirement.
diff --git a/test/functional/feature_bip68_sequence.py b/test/functional/feature_bip68_sequence.py
index 894afffc79..8768d4040d 100755
--- a/test/functional/feature_bip68_sequence.py
+++ b/test/functional/feature_bip68_sequence.py
@@ -408,10 +408,8 @@ class BIP68Test(BitcoinTestFramework):
     # Use self.nodes[1] to test that version 2 transactions are standard.
     def test_version2_relay(self):
         mini_wallet = MiniWallet(self.nodes[1])
-        mini_wallet.rescan_utxos()
-        tx = mini_wallet.create_self_transfer()["tx"]
-        tx.nVersion = 2
-        mini_wallet.sendrawtransaction(from_node=self.nodes[1], tx_hex=tx.serialize().hex())
+        mini_wallet.send_self_transfer(from_node=self.nodes[1], version=2)
+
 
 if __name__ == '__main__':
     BIP68Test().main()
diff --git a/test/functional/mempool_accept_v3.py b/test/functional/mempool_accept_v3.py
new file mode 100755
index 0000000000..ca599a9993
--- /dev/null
+++ b/test/functional/mempool_accept_v3.py
@@ -0,0 +1,418 @@
+#!/usr/bin/env python3
+# Copyright (c) 2024 The Bitcoin Core developers
+# Distributed under the MIT software license, see the accompanying
+# file COPYING or http://www.opensource.org/licenses/mit-license.php.
+
+from test_framework.messages import (
+    MAX_BIP125_RBF_SEQUENCE,
+)
+from test_framework.test_framework import BitcoinTestFramework
+from test_framework.util import (
+    assert_equal,
+    assert_greater_than,
+    assert_greater_than_or_equal,
+    assert_raises_rpc_error,
+)
+from test_framework.wallet import (
+    DEFAULT_FEE,
+    MiniWallet,
+)
+
+def cleanup(extra_args=None):
+    def decorator(func):
+        def wrapper(self):
+            try:
+                if extra_args is not None:
+                    self.restart_node(0, extra_args=extra_args)
+                func(self)
+            finally:
+                # Clear mempool again after test
+                self.generate(self.nodes[0], 1)
+                if extra_args is not None:
+                    self.restart_node(0)
+        return wrapper
+    return decorator
+
+class MempoolAcceptV3(BitcoinTestFramework):
+    def set_test_params(self):
+        self.num_nodes = 1
+        self.extra_args = [["-acceptnonstdtxn=1"]]
+        self.setup_clean_chain = True
+
+    def check_mempool(self, txids):
+        """Assert exact contents of the node's mempool (by txid)."""
+        mempool_contents = self.nodes[0].getrawmempool()
+        assert_equal(len(txids), len(mempool_contents))
+        assert all([txid in txids for txid in mempool_contents])
+
+    @cleanup(extra_args=["-datacarriersize=1000", "-acceptnonstdtxn=1"])
+    def test_v3_acceptance(self):
+        node = self.nodes[0]
+        self.log.info("Test a child of a v3 transaction cannot be more than 1000vB")
+        tx_v3_parent_normal = self.wallet.send_self_transfer(from_node=node, version=3)
+        self.check_mempool([tx_v3_parent_normal["txid"]])
+        tx_v3_child_heavy = self.wallet.create_self_transfer(
+            utxo_to_spend=tx_v3_parent_normal["new_utxo"],
+            target_weight=4004,
+            version=3
+        )
+        assert_greater_than_or_equal(tx_v3_child_heavy["tx"].get_vsize(), 1000)
+        expected_error_child_heavy = f"v3-rule-violation, v3 child tx {tx_v3_child_heavy['txid']} (wtxid={tx_v3_child_heavy['wtxid']}) is too big"
+        assert_raises_rpc_error(-26, expected_error_child_heavy, node.sendrawtransaction, tx_v3_child_heavy["hex"])
+        self.check_mempool([tx_v3_parent_normal["txid"]])
+        # tx has no descendants
+        assert_equal(node.getmempoolentry(tx_v3_parent_normal["txid"])["descendantcount"], 1)
+
+        self.log.info("Test that, during replacements, only the new transaction counts for v3 descendant limit")
+        tx_v3_child_almost_heavy = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE,
+            utxo_to_spend=tx_v3_parent_normal["new_utxo"],
+            target_weight=3987,
+            version=3
+        )
+        assert_greater_than_or_equal(1000, tx_v3_child_almost_heavy["tx"].get_vsize())
+        self.check_mempool([tx_v3_parent_normal["txid"], tx_v3_child_almost_heavy["txid"]])
+        assert_equal(node.getmempoolentry(tx_v3_parent_normal["txid"])["descendantcount"], 2)
+        tx_v3_child_almost_heavy_rbf = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE * 2,
+            utxo_to_spend=tx_v3_parent_normal["new_utxo"],
+            target_weight=3500,
+            version=3
+        )
+        assert_greater_than_or_equal(tx_v3_child_almost_heavy["tx"].get_vsize() + tx_v3_child_almost_heavy_rbf["tx"].get_vsize(), 1000)
+        self.check_mempool([tx_v3_parent_normal["txid"], tx_v3_child_almost_heavy_rbf["txid"]])
+        assert_equal(node.getmempoolentry(tx_v3_parent_normal["txid"])["descendantcount"], 2)
+
+    @cleanup(extra_args=["-acceptnonstdtxn=1"])
+    def test_v3_replacement(self):
+        node = self.nodes[0]
+        self.log.info("Test v3 transactions may be replaced by v3 transactions")
+        utxo_v3_bip125 = self.wallet.get_utxo()
+        tx_v3_bip125 = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE,
+            utxo_to_spend=utxo_v3_bip125,
+            sequence=MAX_BIP125_RBF_SEQUENCE,
+            version=3
+        )
+        self.check_mempool([tx_v3_bip125["txid"]])
+
+        tx_v3_bip125_rbf = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE * 2,
+            utxo_to_spend=utxo_v3_bip125,
+            version=3
+        )
+        self.check_mempool([tx_v3_bip125_rbf["txid"]])
+
+        self.log.info("Test v3 transactions may be replaced by V2 transactions")
+        tx_v3_bip125_rbf_v2 = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE * 3,
+            utxo_to_spend=utxo_v3_bip125,
+            version=2
+        )
+        self.check_mempool([tx_v3_bip125_rbf_v2["txid"]])
+
+        self.log.info("Test that replacements cannot cause violation of inherited v3")
+        utxo_v3_parent = self.wallet.get_utxo()
+        tx_v3_parent = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE,
+            utxo_to_spend=utxo_v3_parent,
+            version=3
+        )
+        tx_v3_child = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE,
+            utxo_to_spend=tx_v3_parent["new_utxo"],
+            version=3
+        )
+        self.check_mempool([tx_v3_bip125_rbf_v2["txid"], tx_v3_parent["txid"], tx_v3_child["txid"]])
+
+        tx_v3_child_rbf_v2 = self.wallet.create_self_transfer(
+            fee_rate=DEFAULT_FEE * 2,
+            utxo_to_spend=tx_v3_parent["new_utxo"],
+            version=2
+        )
+        expected_error_v2_v3 = f"v3-rule-violation, non-v3 tx {tx_v3_child_rbf_v2['txid']} (wtxid={tx_v3_child_rbf_v2['wtxid']}) cannot spend from v3 tx {tx_v3_parent['txid']} (wtxid={tx_v3_parent['wtxid']})"
+        assert_raises_rpc_error(-26, expected_error_v2_v3, node.sendrawtransaction, tx_v3_child_rbf_v2["hex"])
+        self.check_mempool([tx_v3_bip125_rbf_v2["txid"], tx_v3_parent["txid"], tx_v3_child["txid"]])
+
+
+    @cleanup(extra_args=["-acceptnonstdtxn=1"])
+    def test_v3_bip125(self):
+        node = self.nodes[0]
+        self.log.info("Test v3 transactions that don't signal BIP125 are replaceable")
+        assert_equal(node.getmempoolinfo()["fullrbf"], False)
+        utxo_v3_no_bip125 = self.wallet.get_utxo()
+        tx_v3_no_bip125 = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE,
+            utxo_to_spend=utxo_v3_no_bip125,
+            sequence=MAX_BIP125_RBF_SEQUENCE + 1,
+            version=3
+        )
+
+        self.check_mempool([tx_v3_no_bip125["txid"]])
+        assert not node.getmempoolentry(tx_v3_no_bip125["txid"])["bip125-replaceable"]
+        tx_v3_no_bip125_rbf = self.wallet.send_self_transfer(
+            from_node=node,
+            fee_rate=DEFAULT_FEE * 2,
+            utxo_to_spend=utxo_v3_no_bip125,
+            version=3
+        )
+        self.check_mempool([tx_v3_no_bip125_rbf["txid"]])
+
+    @cleanup(extra_args=["-datacarriersize=40000", "-acceptnonstdtxn=1"])
+    def test_v3_reorg(self):
+        node = self.nodes[0]
+        self.log.info("Test that, during a reorg, v3 rules are not enforced")
+        tx_v2_block = self.wallet.send_self_transfer(from_node=node, version=2)
+        tx_v3_block = self.wallet.send_self_transfer(from_node=node, version=3)
+        tx_v3_block2 = self.wallet.send_self_transfer(from_node=node, version=3)
+        self.check_mempool([tx_v3_block["txid"], tx_v2_block["txid"], tx_v3_block2["txid"]])
+
+        block = self.generate(node, 1)
+        self.check_mempool([])
+        tx_v2_from_v3 = self.wallet.send_self_transfer(from_node=node, utxo_to_spend=tx_v3_block["new_utxo"], version=2)
+        tx_v3_from_v2 = self.wallet.send_self_transfer(from_node=node, utxo_to_spend=tx_v2_block["new_utxo"], version=3)
+        tx_v3_child_large = self.wallet.send_self_transfer(from_node=node, utxo_to_spend=tx_v3_block2["new_utxo"], target_weight=5000, version=3)
+        assert_greater_than(node.getmempoolentry(tx_v3_child_large["txid"])["vsize"], 1000)
+        self.check_mempool([tx_v2_from_v3["txid"], tx_v3_from_v2["txid"], tx_v3_child_large["txid"]])
+        node.invalidateblock(block[0])
+        self.check_mempool([tx_v3_block["txid"], tx_v2_block["txid"], tx_v3_block2["txid"], tx_v2_from_v3["txid"], tx_v3_from_v2["txid"], tx_v3_child_large["txid"]])
+        # This is needed because generate() will create the exact same block again.
+        node.reconsiderblock(block[0])
+
+
+    @cleanup(extra_args=["-limitdescendantsize=10", "-datacarriersize=40000", "-acceptnonstdtxn=1"])
+    def test_nondefault_package_limits(self):
+        """
+        Max standard tx size + v3 rules imply the ancestor/descendant rules (at their default
+        values), but those checks must not be skipped. Ensure both sets of checks are done by
+        changing the ancestor/descendant limit configurations.
+        """
+        node = self.nodes[0]
+        self.log.info("Test that a decreased limitdescendantsize also applies to v3 child")
+        tx_v3_parent_large1 = self.wallet.send_self_transfer(from_node=node, target_weight=99900, version=3)
+        tx_v3_child_large1 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_parent_large1["new_utxo"], version=3)
+        # Child is within v3 limits, but parent's descendant limit is exceeded
+        assert_greater_than(1000, tx_v3_child_large1["tx"].get_vsize())
+        assert_raises_rpc_error(-26, f"too-long-mempool-chain, exceeds descendant size limit for tx {tx_v3_parent_large1['txid']}", node.sendrawtransaction, tx_v3_child_large1["hex"])
+        self.check_mempool([tx_v3_parent_large1["txid"]])
+        assert_equal(node.getmempoolentry(tx_v3_parent_large1["txid"])["descendantcount"], 1)
+        self.generate(node, 1)
+
+        self.log.info("Test that a decreased limitancestorsize also applies to v3 parent")
+        self.restart_node(0, extra_args=["-limitancestorsize=10", "-datacarriersize=40000", "-acceptnonstdtxn=1"])
+        tx_v3_parent_large2 = self.wallet.send_self_transfer(from_node=node, target_weight=99900, version=3)
+        tx_v3_child_large2 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_parent_large2["new_utxo"], version=3)
+        # Child is within v3 limits
+        assert_greater_than_or_equal(1000, tx_v3_child_large2["tx"].get_vsize())
+        assert_raises_rpc_error(-26, f"too-long-mempool-chain, exceeds ancestor size limit", node.sendrawtransaction, tx_v3_child_large2["hex"])
+        self.check_mempool([tx_v3_parent_large2["txid"]])
+
+    @cleanup(extra_args=["-datacarriersize=1000", "-acceptnonstdtxn=1"])
+    def test_v3_ancestors_package(self):
+        self.log.info("Test that v3 ancestor limits are checked within the package")
+        node = self.nodes[0]
+        tx_v3_parent_normal = self.wallet.create_self_transfer(
+            fee_rate=0,
+            target_weight=4004,
+            version=3
+        )
+        tx_v3_parent_2_normal = self.wallet.create_self_transfer(
+            fee_rate=0,
+            target_weight=4004,
+            version=3
+        )
+        tx_v3_child_multiparent = self.wallet.create_self_transfer_multi(
+            utxos_to_spend=[tx_v3_parent_normal["new_utxo"], tx_v3_parent_2_normal["new_utxo"]],
+            fee_per_output=10000,
+            version=3
+        )
+        tx_v3_child_heavy = self.wallet.create_self_transfer_multi(
+            utxos_to_spend=[tx_v3_parent_normal["new_utxo"]],
+            target_weight=4004,
+            fee_per_output=10000,
+            version=3
+        )
+
+        self.check_mempool([])
+        result = node.submitpackage([tx_v3_parent_normal["hex"], tx_v3_parent_2_normal["hex"], tx_v3_child_multiparent["hex"]])
+        assert_equal(result['package_msg'], f"v3-violation, tx {tx_v3_child_multiparent['txid']} (wtxid={tx_v3_child_multiparent['wtxid']}) would have too many ancestors")
+        self.check_mempool([])
+
+        self.check_mempool([])
+        result = node.submitpackage([tx_v3_parent_normal["hex"], tx_v3_child_heavy["hex"]])
+        # tx_v3_child_heavy is heavy based on weight, not sigops.
+        assert_equal(result['package_msg'], f"v3-violation, v3 child tx {tx_v3_child_heavy['txid']} (wtxid={tx_v3_child_heavy['wtxid']}) is too big: {tx_v3_child_heavy['tx'].get_vsize()} > 1000 virtual bytes")
+        self.check_mempool([])
+
+        tx_v3_parent = self.wallet.create_self_transfer(version=3)
+        tx_v3_child = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_parent["new_utxo"], version=3)
+        tx_v3_grandchild = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_child["new_utxo"], version=3)
+        result = node.testmempoolaccept([tx_v3_parent["hex"], tx_v3_child["hex"], tx_v3_grandchild["hex"]])
+        assert all([txresult["package-error"] == f"v3-violation, tx {tx_v3_grandchild['txid']} (wtxid={tx_v3_grandchild['wtxid']}) would have too many ancestors" for txresult in result])
+
+    @cleanup(extra_args=["-acceptnonstdtxn=1"])
+    def test_v3_ancestors_package_and_mempool(self):
+        """
+        A v3 transaction in a package cannot have 2 v3 parents.
+        Test that if we have a transaction graph A -> B -> C, where A, B, C are
+        all v3 transactions, that we cannot use submitpackage to get the
+        transactions all into the mempool.
+
+        Verify, in particular, that if A is already in the mempool, then
+        submitpackage(B, C) will fail.
+        """
+        node = self.nodes[0]
+        self.log.info("Test that v3 ancestor limits include transactions within the package and all in-mempool ancestors")
+        # This is our transaction "A":
+        tx_in_mempool = self.wallet.send_self_transfer(from_node=node, version=3)
+
+        # Verify that A is in the mempool
+        self.check_mempool([tx_in_mempool["txid"]])
+
+        # tx_0fee_parent is our transaction "B"; just create it.
+        tx_0fee_parent = self.wallet.create_self_transfer(utxo_to_spend=tx_in_mempool["new_utxo"], fee=0, fee_rate=0, version=3)
+
+        # tx_child_violator is our transaction "C"; create it:
+        tx_child_violator = self.wallet.create_self_transfer_multi(utxos_to_spend=[tx_0fee_parent["new_utxo"]], version=3)
+
+        # submitpackage(B, C) should fail
+        result = node.submitpackage([tx_0fee_parent["hex"], tx_child_violator["hex"]])
+        assert_equal(result['package_msg'], f"v3-violation, tx {tx_child_violator['txid']} (wtxid={tx_child_violator['wtxid']}) would have too many ancestors")
+        self.check_mempool([tx_in_mempool["txid"]])
+
+    @cleanup(extra_args=["-acceptnonstdtxn=1"])
+    def test_mempool_sibling(self):
+        self.log.info("Test that v3 transaction cannot have mempool siblings")
+        node = self.nodes[0]
+        # Add a parent + child to mempool
+        tx_mempool_parent = self.wallet.send_self_transfer_multi(
+            from_node=node,
+            utxos_to_spend=[self.wallet.get_utxo()],
+            num_outputs=2,
+            version=3
+        )
+        tx_mempool_sibling = self.wallet.send_self_transfer(
+            from_node=node,
+            utxo_to_spend=tx_mempool_parent["new_utxos"][0],
+            version=3
+        )
+        self.check_mempool([tx_mempool_parent["txid"], tx_mempool_sibling["txid"]])
+
+        tx_has_mempool_sibling = self.wallet.create_self_transfer(
+            utxo_to_spend=tx_mempool_parent["new_utxos"][1],
+            version=3
+        )
+        expected_error_mempool_sibling = f"v3-rule-violation, tx {tx_mempool_parent['txid']} (wtxid={tx_mempool_parent['wtxid']}) would exceed descendant count limit"
+        assert_raises_rpc_error(-26, expected_error_mempool_sibling, node.sendrawtransaction, tx_has_mempool_sibling["hex"])
+
+        tx_has_mempool_uncle = self.wallet.create_self_transfer(utxo_to_spend=tx_has_mempool_sibling["new_utxo"], version=3)
+
+        # Also fails with another non-related transaction via testmempoolaccept
+        tx_unrelated = self.wallet.create_self_transfer(version=3)
+        result_test_unrelated = node.testmempoolaccept([tx_has_mempool_sibling["hex"], tx_unrelated["hex"]])
+        assert_equal(result_test_unrelated[0]["reject-reason"], "v3-rule-violation")
+
+        result_test_1p1c = node.testmempoolaccept([tx_has_mempool_sibling["hex"], tx_has_mempool_uncle["hex"]])
+        assert_equal(result_test_1p1c[0]["reject-reason"], "v3-rule-violation")
+
+        # Also fails with a child via submitpackage
+        result_submitpackage = node.submitpackage([tx_has_mempool_sibling["hex"], tx_has_mempool_uncle["hex"]])
+        assert_equal(result_submitpackage["tx-results"][tx_has_mempool_sibling['wtxid']]['error'], expected_error_mempool_sibling)
+
+
+    @cleanup(extra_args=["-datacarriersize=1000", "-acceptnonstdtxn=1"])
+    def test_v3_package_inheritance(self):
+        self.log.info("Test that v3 inheritance is checked within package")
+        node = self.nodes[0]
+        tx_v3_parent = self.wallet.create_self_transfer(
+            fee_rate=0,
+            target_weight=4004,
+            version=3
+        )
+        tx_v2_child = self.wallet.create_self_transfer_multi(
+            utxos_to_spend=[tx_v3_parent["new_utxo"]],
+            fee_per_output=10000,
+            version=2
+        )
+        self.check_mempool([])
+        result = node.submitpackage([tx_v3_parent["hex"], tx_v2_child["hex"]])
+        assert_equal(result['package_msg'], f"v3-violation, non-v3 tx {tx_v2_child['txid']} (wtxid={tx_v2_child['wtxid']}) cannot spend from v3 tx {tx_v3_parent['txid']} (wtxid={tx_v3_parent['wtxid']})")
+        self.check_mempool([])
+
+    @cleanup(extra_args=["-acceptnonstdtxn=1"])
+    def test_v3_in_testmempoolaccept(self):
+        node = self.nodes[0]
+
+        self.log.info("Test that v3 inheritance is accurately assessed in testmempoolaccept")
+        tx_v2 = self.wallet.create_self_transfer(version=2)
+        tx_v2_from_v2 = self.wallet.create_self_transfer(utxo_to_spend=tx_v2["new_utxo"], version=2)
+        tx_v3_from_v2 = self.wallet.create_self_transfer(utxo_to_spend=tx_v2["new_utxo"], version=3)
+        tx_v3 = self.wallet.create_self_transfer(version=3)
+        tx_v2_from_v3 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3["new_utxo"], version=2)
+        tx_v3_from_v3 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3["new_utxo"], version=3)
+
+        # testmempoolaccept paths don't require child-with-parents topology. Ensure that topology
+        # assumptions aren't made in inheritance checks.
+        test_accept_v2_and_v3 = node.testmempoolaccept([tx_v2["hex"], tx_v3["hex"]])
+        assert all([result["allowed"] for result in test_accept_v2_and_v3])
+
+        test_accept_v3_from_v2 = node.testmempoolaccept([tx_v2["hex"], tx_v3_from_v2["hex"]])
+        expected_error_v3_from_v2 = f"v3-violation, v3 tx {tx_v3_from_v2['txid']} (wtxid={tx_v3_from_v2['wtxid']}) cannot spend from non-v3 tx {tx_v2['txid']} (wtxid={tx_v2['wtxid']})"
+        assert all([result["package-error"] == expected_error_v3_from_v2 for result in test_accept_v3_from_v2])
+
+        test_accept_v2_from_v3 = node.testmempoolaccept([tx_v3["hex"], tx_v2_from_v3["hex"]])
+        expected_error_v2_from_v3 = f"v3-violation, non-v3 tx {tx_v2_from_v3['txid']} (wtxid={tx_v2_from_v3['wtxid']}) cannot spend from v3 tx {tx_v3['txid']} (wtxid={tx_v3['wtxid']})"
+        assert all([result["package-error"] == expected_error_v2_from_v3 for result in test_accept_v2_from_v3])
+
+        test_accept_pairs = node.testmempoolaccept([tx_v2["hex"], tx_v3["hex"], tx_v2_from_v2["hex"], tx_v3_from_v3["hex"]])
+        assert all([result["allowed"] for result in test_accept_pairs])
+
+        self.log.info("Test that descendant violations are caught in testmempoolaccept")
+        tx_v3_independent = self.wallet.create_self_transfer(version=3)
+        tx_v3_parent = self.wallet.create_self_transfer_multi(num_outputs=2, version=3)
+        tx_v3_child_1 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_parent["new_utxos"][0], version=3)
+        tx_v3_child_2 = self.wallet.create_self_transfer(utxo_to_spend=tx_v3_parent["new_utxos"][1], version=3)
+        test_accept_2children = node.testmempoolaccept([tx_v3_parent["hex"], tx_v3_child_1["hex"], tx_v3_child_2["hex"]])
+        expected_error_2children = f"v3-violation, tx {tx_v3_parent['txid']} (wtxid={tx_v3_parent['wtxid']}) would exceed descendant count limit"
+        assert all([result["package-error"] == expected_error_2children for result in test_accept_2children])
+
+        # Extra v3 transaction does not get incorrectly marked as extra descendant
+        test_accept_1child_with_exra = node.testmempoolaccept([tx_v3_parent["hex"], tx_v3_child_1["hex"], tx_v3_independent["hex"]])
+        assert all([result["allowed"] for result in test_accept_1child_with_exra])
+
+        # Extra v3 transaction does not make us ignore the extra descendant
+        test_accept_2children_with_exra = node.testmempoolaccept([tx_v3_parent["hex"], tx_v3_child_1["hex"], tx_v3_child_2["hex"], tx_v3_independent["hex"]])
+        expected_error_extra = f"v3-violation, tx {tx_v3_parent['txid']} (wtxid={tx_v3_parent['wtxid']}) would exceed descendant count limit"
+        assert all([result["package-error"] == expected_error_extra for result in test_accept_2children_with_exra])
+        # Same result if the parent is already in mempool
+        node.sendrawtransaction(tx_v3_parent["hex"])
+        test_accept_2children_with_in_mempool_parent = node.testmempoolaccept([tx_v3_child_1["hex"], tx_v3_child_2["hex"]])
+        assert all([result["package-error"] == expected_error_extra for result in test_accept_2children_with_in_mempool_parent])
+
+    def run_test(self):
+        self.log.info("Generate blocks to create UTXOs")
+        node = self.nodes[0]
+        self.wallet = MiniWallet(node)
+        self.generate(self.wallet, 110)
+        self.test_v3_acceptance()
+        self.test_v3_replacement()
+        self.test_v3_bip125()
+        self.test_v3_reorg()
+        self.test_nondefault_package_limits()
+        self.test_v3_ancestors_package()
+        self.test_v3_ancestors_package_and_mempool()
+        self.test_mempool_sibling()
+        self.test_v3_package_inheritance()
+        self.test_v3_in_testmempoolaccept()
+
+
+if __name__ == "__main__":
+    MempoolAcceptV3().main()
diff --git a/test/functional/mempool_package_limits.py b/test/functional/mempool_package_limits.py
index 81451bf2a5..2a64597511 100755
--- a/test/functional/mempool_package_limits.py
+++ b/test/functional/mempool_package_limits.py
@@ -29,7 +29,7 @@ def check_package_limits(func):
         testres_error_expected = node.testmempoolaccept(rawtxs=package_hex)
         assert_equal(len(testres_error_expected), len(package_hex))
         for txres in testres_error_expected:
-            assert_equal(txres["package-error"], "package-mempool-limits")
+            assert "package-mempool-limits" in txres["package-error"]
 
         # Clear mempool and check that the package passes now
         self.generate(node, 1)
diff --git a/test/functional/mempool_sigoplimit.py b/test/functional/mempool_sigoplimit.py
index 2e7850fb40..384423e5f5 100755
--- a/test/functional/mempool_sigoplimit.py
+++ b/test/functional/mempool_sigoplimit.py
@@ -165,7 +165,8 @@ class BytesPerSigOpTest(BitcoinTestFramework):
         # But together, it's exceeding limits in the *package* context. If sigops adjusted vsize wasn't being checked
         # here, it would get further in validation and give too-long-mempool-chain error instead.
         packet_test = self.nodes[0].testmempoolaccept([tx_parent.serialize().hex(), tx_child.serialize().hex()])
-        assert_equal([x["package-error"] for x in packet_test], ["package-mempool-limits", "package-mempool-limits"])
+        expected_package_error = f"package-mempool-limits, package size {2*20*5000} exceeds ancestor size limit [limit: 101000]"
+        assert_equal([x["package-error"] for x in packet_test], [expected_package_error] * 2)
 
         # When we actually try to submit, the parent makes it into the mempool, but the child would exceed ancestor vsize limits
         res = self.nodes[0].submitpackage([tx_parent.serialize().hex(), tx_child.serialize().hex()])
diff --git a/test/functional/test_framework/wallet.py b/test/functional/test_framework/wallet.py
index 53c8e1b0cc..470ed08ed4 100644
--- a/test/functional/test_framework/wallet.py
+++ b/test/functional/test_framework/wallet.py
@@ -286,11 +286,12 @@ class MiniWallet:
         utxos_to_spend: Optional[list[dict]] = None,
         num_outputs=1,
         amount_per_output=0,
+        version=2,
         locktime=0,
         sequence=0,
         fee_per_output=1000,
         target_weight=0,
-        confirmed_only=False
+        confirmed_only=False,
     ):
         """
         Create and return a transaction that spends the given UTXOs and creates a
@@ -313,6 +314,7 @@ class MiniWallet:
         tx = CTransaction()
         tx.vin = [CTxIn(COutPoint(int(utxo_to_spend['txid'], 16), utxo_to_spend['vout']), nSequence=seq) for utxo_to_spend, seq in zip(utxos_to_spend, sequence)]
         tx.vout = [CTxOut(amount_per_output, bytearray(self._scriptPubKey)) for _ in range(num_outputs)]
+        tx.nVersion = version
         tx.nLockTime = locktime
 
         self.sign_tx(tx)
@@ -337,14 +339,15 @@ class MiniWallet:
             "tx": tx,
         }
 
-    def create_self_transfer(self, *,
+    def create_self_transfer(
+            self,
+            *,
             fee_rate=Decimal("0.003"),
             fee=Decimal("0"),
             utxo_to_spend=None,
-            locktime=0,
-            sequence=0,
             target_weight=0,
-            confirmed_only=False
+            confirmed_only=False,
+            **kwargs,
     ):
         """Create and return a tx with the specified fee. If fee is 0, use fee_rate, where the resulting fee may be exact or at most one satoshi higher than needed."""
         utxo_to_spend = utxo_to_spend or self.get_utxo(confirmed_only=confirmed_only)
@@ -360,7 +363,12 @@ class MiniWallet:
         send_value = utxo_to_spend["value"] - (fee or (fee_rate * vsize / 1000))
 
         # create tx
-        tx = self.create_self_transfer_multi(utxos_to_spend=[utxo_to_spend], locktime=locktime, sequence=sequence, amount_per_output=int(COIN * send_value), target_weight=target_weight)
+        tx = self.create_self_transfer_multi(
+            utxos_to_spend=[utxo_to_spend],
+            amount_per_output=int(COIN * send_value),
+            target_weight=target_weight,
+            **kwargs,
+        )
         if not target_weight:
             assert_equal(tx["tx"].get_vsize(), vsize)
         tx["new_utxo"] = tx.pop("new_utxos")[0]
diff --git a/test/functional/test_runner.py b/test/functional/test_runner.py
index d037ccf6dd..e438a60edc 100755
--- a/test/functional/test_runner.py
+++ b/test/functional/test_runner.py
@@ -266,6 +266,7 @@ BASE_SCRIPTS = [
     'p2p_v2_encrypted.py',
     'p2p_v2_earlykeyresponse.py',
     'example_test.py',
+    'mempool_accept_v3.py',
     'wallet_txn_doublespend.py --legacy-wallet',
     'wallet_multisig_descriptor_psbt.py --descriptors',
     'wallet_txn_doublespend.py --descriptors',