Can someone clarify how ADA is designed to prevent fees from exploding to the level of ETH gas fees as the token increases in value and network in usage?

I’ve read through the available articles but am still not entirely clear on what mechanisms we have in place, by design, to prevent the increase of price for fees on transactions done in the Cardano network.

Is that the three parameters (a, b, and x) be adjusted through governance / voting polls when necessary?

Thanks in advance to any one who can provide technical insights into how this is prevented by design.



unfortunately I cannot explain it short, but the parameters like saturation can be adjusted in future by the community vote. As of today IOHK makes the decisions.
There are also parameters which can be voted in future to organize the transactions fees. I hope maybe someone has a link to a similar discussion. I could not find it, yet. I just read about this on the official telegram channel.



Sorry, it’s a bit of a non-answer as I’ve been meaning to look into this more myself. From an old post…

…yes, the a and b parameters (not x, x is transaction size) set the fees for transactions, which require a vote and hard fork combinator (HFC) event to change. Fee rewards are distributed amongst all pools who minted a block that epoch (proportional to the number of blocks minted).

What I’m not sure of: What happens if the network gets congested? You can set a higher fee than the minimum. How, I don’t know. Perhaps it’s similar to in ETH where SPO’s opt to prioritize transactions with higher fees, but it could be random or FIFO for all I know.
I do know that Cardano is “faster” than Ethereum and has additional scaling solutions that they are working on, so hopefully we won’t ever see network congestion (or maybe hopefully we do?) Hydra: Cardano scalability solution

Afaik, tx in Cardano cannot be prioritised, because one tx could depend on other tx in the mempool, due to the state machine nature of the non-native scripts (smart contracts i.e. Plutus Core atm).

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Atm, all the tx fee is around 20 USD cents, if it ADA reaches some high value e.g. 10$ (very-very unlikely in the next 5 yrs), we can vote to make it to the average 20 cent again instead of 2$ or even oracles would be able to adjust the price (not in the foreseen future).

Unfortunately, transaction’s value based calculation is not realistic, here is a very simple example why.
You want to pay, 1 ADA for some goods or services, but only you have one 100K valued UtxO (like a packet in your jeans). So, when you pay it, 1ADA goes to the merchandise and 99999ADA - ~0.17ADA fee, goes back to you. The system does not know the origin of these, so it would calculate the fee for the 100K instead of the 1ADA if value based fees would be implemented. It’s more complicated but for now for a non tech-savvy this explanation would do.

Though, smart contracts will have similar fee structured like Ethereum i.e. fee = normal storage fee + script execution fee.

But, for tokens transfer the fee is similar, but the sender needs to pay an extra ADA (minUtxOValue) to the token receiver atm. But, I think it will be changed in the near future.