Transaction fees (quick view)

There are two main reasons to have transaction fees on Cardano , or any other cryptocurrency:

  1. Preventing distributed denial of service (DDoS) attacks. In a DDoS attack, an attacker attempts to flood the network with spam transactions. If he were required to pay a sufficiently high fee for each of these fictitious transactions, this form of attack would be prohibitively expensive.
  2. Provide funds for incentives.

How transaction fees work

Each time someone wants to transfer an amount of Ada, a minimum fee is paid for that transaction. This minimum fee validates the transaction, although the sender is free to pay higher fees if they wish.

Minimum fee

A transaction of 200 bytes in size (a fairly typical size) costs ( at the time of writing ):

0,155381 Ada + 0,000043946 Ada/byte × 200 byte = 0,1641702 Ada.

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

a + b × size

whence:

a: is a special constant, currently 0.155381 Ada;

b: is a special constant, currently 0.000043946 Ada/byte;

size: is the size of the transaction in bytes.

The reason for having the a parameter is to prevent the DDoS attacks mentioned above. Even a very small dummy transaction should cost enough to hurt an attacker trying to generate many thousands of them.

The parameter b has been introduced to reflect the real costs: storing larger transactions requires more computer memory than storing smaller transactions, so larger transactions should be more expensive than smaller ones.

Although particular values were calculated for parameters a and b, it is likely that these values will be adjusted in the future to better reflect actual costs.

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