Transaction Fee Model For Native Coins on Cardano

Developers Native Tokens
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So what’s the point of even holding ADA (other than governance) if there are no transaction fees for transferring native tokens on Cardano?

Can’t every token that’s currently on another network just issue a version that’s native to the Cardano ecosystem and then start using the network for free and clog up all of the resources without contributing anything back?

The whole point of gas fees is to constrain resource usage on the network – doesn’t this lack of transaction fees drastically reduce one of the central drivers of demand for ADA while increasing the demand to use the network?

Unless Cardano wants to be a charity and somehow subsidize everybody in the world who wants to run a dApp on the network, all of this seems very backward.

What motivation do dApp creators have to acquire ADA now, other than governance?

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Hello @AdamF1,
I think you have misunderstood something. Transferring native tokens is not free. All other tokens have to pay ada as a transaction fee.

What’s true, there would basically be the possibility of some (very special) tokens being able to pay for their own transactions in the future. However, this cannot be decided by the token creators ( precisely for the reasons you mentioned) but would have to be voted on by the community. If the community thinks there is such a token in the future that adds so much value to Cardano then there could be a path for it.

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Thank you, I have definitely misunderstood a few things – especially regarding the definition of native tokens.

Is the following correct?

:

The only tokens that wouldn’t have a transaction fee are tokens that the Cardano governance system votes to issue into existence?

For example, the new Cardano stablecoin has a transfer fee associated with transactions because it’s on the Cardano blockchain but not considered a native token?

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I’m glad you are asking because this is not correct. You have to pay transaction fees for every transaction whether it is the principal currency (ada) or not.

“Native tokens” or “first class citizens” refers to how tokens are handled from a ledger type of view. This approach enables the representation of custom assets on the blockchain without the need for smart contracts, and also enables those assets to behave in a similar way to the principal currency (ada). Please see this article for detailed informations: https://iohk.io/en/blog/posts/2020/12/08/native-tokens-on-cardano/

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“What motivation do dApp creators have to acquire ADA now, other than governance?”

seems as a good question, but isn’t governance sufficient motivation to acquire ADA, if you think that Cardano project would be successful?

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Welcome @casperBGD,
that was a good question, but it turned out to be based on false assumptions. (= assumption that transactions cost nothing)

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Hi I have a follow-on question on Native Tokens production

I believe the cost to create say 1000 Native tokens or 1Trillion Native tokens is the same as is just one transaction for either.

Would much appreciate confirmation or clarification / correction to my understanding.

Kind Regards
Shad

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Hi all, this was previously answered as below.

Understand better now
Kind Regards
Shad

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