Cardano Business Model


#1

I am trying to wrap my head around Cardano’s business model. So we will have a platform where developers will be able to make Apps where for example business to business and/or business to consumer, etc… transactions can take place using ADA as the currency. The transactions will be validated by block producers (nodes) that consist of a pool (out of ~100) of ADA stakeholders. Block producers will be chosen randomly and will get 75% of a fee charged for a transaction (e.g. a consumer shopping online, someone buying/selling property, etc…). The other 25% of this fee will be put into a treasury to sustain and improve the Cardano network.
Is the above description accurate? If so, will the transaction fee be a flat rate or a small percentage of the value of the transaction? You could see why this could make a big difference just by the example I gave. Thanks in advance.


#2

Yes :slight_smile:

There’s actually a special page in the official documentation describing the fee system:

The minimal fees for a transaction are calculated according to the formula:

a + b × size

Where:
a - is a special constant, at the moment it is 0.155381 ADA;
b - is a special constant, at the moment it is 0.000043946 ADA/byte;
size - is the size of the transaction in bytes.

For now, average fee for a “standard” transaction of two inputs and one output is ~0.17 ADA.

Constants a and b are protocol parameters and may be changed later (for example, by a vote). If ADA ever gets so expensive that ~0.17 fee becomes unreasonable - constant a may be reduced.


#3

Thank you for your reply, @vantuz-subhuman.