Problem with fluctuation in ADA and transaction fee

I copy the content from my email sent to Cardano team, could you guys please share opinion on this subject. below are the content:

In order for ADA to become a currency, we need the price of ADA to be more stable, ex. when buying a cola sell at 5 ADA the price of ADA need to be more stable compared with the USD or EURO or whatever currency in order to manage the supply chain because some ingredient might come from another country.

Could you please address this issue?

I have two more questions about transaction fees.

First, from the “Incentives in Cardano Presentation” from IOHK, the formula for transaction fee is a + b × size an example shows that a typical transaction could cost 0.1641702 ADA. which in Thailand is 1.64 Thai Baht (Thai currency). In Thailand a small coca cola in local shop cost 12 Baht so your transaction fee cost over 10% of the coca cola price which means paying with cash has far better benefit. from this example you’ll see that the transaction rate is tightly coupled with the fluctuation of ADA. How can you solve this problem?

I understand that the transaction fee with De-FI is worthy but the transaction fee for buying goods at local store doesn’t make much sense. Could you address this issue?

another question is that, In Thailand if you have an account in one bank and your friend happen to have an account in the same bank. There is no transaction fee. How can you compete with that?

Hi @tammarat.w,

You’re correct that the tx fee price is adjustable following the formula you mentioned.
However, from where I stand, I wonder if a blockchain - or at least writing in a immutable ledger - is really required for everyday transactions such as a coke bottle.

If now you compare the cardano transaction fees versus a cross border settlement for a sizeable amount of cash, the balance is suddenly in favor of a blockchain.

Some solutions regarding the specific case you bring might come from second layers solutions, that could practice much less fees, faster or instant finality, without writing anything on the ledger itself.

Cheers,

1 Like

wow, thank you so much for your great answer. Now I understand more clearly. Where can I search for information about second layer? what is the keyword? or what is it called in Cardano? is it this one? Native Custom Tokens in the Extended UTXO Model - IOHK Research. Native custom Token?

It’s called hydra.

1 Like

Thank you so much for great resource Psychomb. Do you have any comment on the fluctuation of ADA? Do ADA need to become currency and if it need to, does fluctuation is a factor that we have to consider and how can we solve this problem?

This a far too complex topic for me to have a clear opinion. :sweat_smile: