Dive into the different types of transaction fees you'll find in Maya and discover strategies to minimize costs.
We've all dealt with transaction fees and know how they can hit our wallets hard. On top of that, most of the time, it's pretty confusing to figure out what exactly we're being charged for: how are these fees calculated, and is there any way to reduce them? This blog is here to answer all these questions and more, making your journey through the Maya ecosystem smoother and more wallet-friendly. Let’s demystify transaction fees.
In simple terms, transaction fees are your pass to trade smoothly and pay the people involved (miners, validators, operations team) in processing that transaction on the blockchain. These fees also help everything run safely, although it should be considered as a rule that the more congested the network is, the more expensive the fee, much like a delivery fee when you want to prioritize a package delivery.
Blockchains and cryptocurrencies are software running on computers, the people operating them need to be compensated for the energy they spend, their hardware, and their efforts. To economically incentivize their role in sustaining the network and ensuring its security, these participants typically earn block rewards generated by the protocol and user transaction fees. This system not only compensates them for their resources and efforts but also underpins the robustness and reliability of the blockchain.
Let's use the package delivery analogy to explain the different types of fees in Maya: inbound,, slippage, outbound, affiliate, and network fees:
Think of it like mailing a package. Your pickup fee is akin to the inbound fee in the Maya ecosystem. This fee, paid from your wallet, kick-starts a transaction like swapping crypto or pulling funds from a liquidity pool. For instance, if you're exchanging BTC for Dash, the inbound fee is charged on the BTC chain, similar to how postage is determined by the origin of your package.
Consider slippage fees as the cost of the delivery service itself, akin to estimating the total expenses of the vehicle and the miles it covers relative to its value. In trading, similar to accounting for variations in delivery routes and times, slippage refers to the difference between the anticipated price of a trade and the price at which it actually executes, often fluctuating due to market dynamics.
This fee is particularly pertinent in transactions where asset values are subject to change, like swaps. In the Maya ecosystem, slippage fees are collected by the Maya chain, paralleling how delivery costs are determined by the specifics of the transportation used.
Imagine if you used a third-party service to facilitate your package delivery, like a UI to help you generate the shipping guide and they charged an extra service fee. This is similar to the affiliate fee in Maya. Some interfaces (platforms or services you use to interact with Maya) may charge this additional fee. It's a percentage of the inbound asset (in this scenario, BTC) and varies between interfaces. It's like paying for that particular service's convenience or extra features. Maya Protocol doesn't profit from this fee; it's specific to your interface.
When you receive a package, sometimes there's a delivery or handling fee. This is like the outbound fee in Maya. It's deducted from the asset you receive after a transaction. Maya covers the transaction fee initially but then deducts it from your outbound asset. So, in this example, the outbound fee is charged on the Dash chain.
Think of it as a primary processing fee that Maya imposes exclusively when converting assets to or form CACAO or synths, replacing the inbound and/or outbound fees. In Maya's ecosystem, this network fee is set at 0.5 CACAO for such transactions.
You can optimize both inbound and outbound fees by timing your transactions during periods of lower activity on your respective source and target chains. This strategy takes advantage of potentially lower fees when the blockchain is less congested.
Regarding slippage fees, a useful approach is to divide your large swap into smaller transactions. While this might involve a trade-off with gas fees, it can result in more favorable pricing. However, this process will become more streamlined and cost-effective when Streaming Swaps come online, which will automate the process without incurring multiple inbound or outbound gas fees.
Additionally, affiliate fees can often be reduced through specific actions. For instance, holding a THORWallet Soldier NFT, executing smaller swaps (below $100) on Asgardex, or conducting larger transactions (over $1M) on Thorswap can offer significant fee discounts. It’s worthwhile to research these opportunities in your preferred user interfaces (UIs) and make sure to leverage these benefits for more efficient trading.
To optimize your transactions, consider conducting them when the Americas and Europe are typically outside office hours. These times often correspond with lower activity levels on the blockchain, potentially leading to reduced gas costs for your swaps.
Do you know any other tips? Don’t hesitate to share it with the tribe on our Discord server. See you there!
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