That is a normal Cardano fee. And the way the network gets to that number is simple enough to check with a calculator.

What is a transaction fee?

A transaction is any change you write to the blockchain: sending ADA, delegating to a stake pool, voting, or using an app. The fee is what you pay so that the network accepts it and puts it into a block.

On Cardano, the fee is paid in ADA. Small amounts of ADA are counted in lovelace, named after the mathematician Ada Lovelace. One ADA is 1,000,000 lovelace.

How is the fee calculated?

The basic formula has two parts:

fee = 155,381 lovelace + 44 lovelace for every byte of the transaction

• The first part is a fixed amount, about 0.155 ADA. Every transaction pays it.
• The second part depends on size. A byte is a small unit of data. A bigger transaction takes more space on every computer that keeps a copy of the blockchain, so it pays more.

A simple payment from one wallet to another is usually a few hundred bytes. With 300 bytes, the fee is 155,381 + 13,200 = 168,581 lovelace, which is about 0.17 ADA. The official cardano.org page on fees lists the same two numbers.

The largest normal transaction allowed is 16,384 bytes. Even that costs less than 0.9 ADA.

What about smart contracts?

A smart contract is a small program that lives on the blockchain, for example a swap on an exchange that has no company behind it. When you use one, the network has to run that program. So you pay a little extra for the memory and computing time it needs.

The good part is that your wallet test runs the program before you sign. It knows the exact cost in advance. If something would fail, you usually see an error in your wallet instead of losing money on a failed attempt.

Why the fee does not jump when the network is busy

On some blockchains, fees work like an auction. When many people want to send at the same time, they bid against each other, and the price can go up very fast. You might pay a few cents in the morning and many dollars in the afternoon for the same thing.

Cardano does not do that. The fee depends on the size of your transaction, not on how many other people are sending. When the network is busy, transactions wait a little longer in a queue, but the price stays the same. Your wallet shows you the fee, you sign, and that is what you pay.

I like this a lot as someone who runs a pool. People who use the network can plan. A shop that accepts ADA knows what a payment will cost tomorrow.

Where does my fee go?

This is the part most people do not know. Your fee does not go to a company. It goes into a shared pot.

At the end of every five-day epoch, the network collects all the fees from that epoch. It adds some ADA from the reserve, the part of the 45 billion ADA that has not been paid out yet. Then it shares the pot:

1. 20% goes to the treasury, the community fund that ADA holders decide about through voting.
2. The rest goes to stake pools and their delegators as staking rewards.

So when you pay a fee, part of it comes back to people who stake, maybe even to you. If you want to know more about the five-day clock, I explained it in What Is an Epoch on Cardano?, and the basics of staking are in What is Cardano Staking?.

Things that look like fees, but are not

New users sometimes see amounts in their wallet that look like costs. Some of them come back.

• Stake deposit, 2 ADA. You pay it once when you start staking. You get it back if you stop.
• Minimum ADA with tokens. On Cardano, every token or NFT must travel with a small amount of ADA, often about 1 to 1.5 ADA. That ADA is not spent. It moves with the token to the next wallet.
• Pool and DRep deposits. People who register a stake pool or become a DRep (a voting representative) leave a bigger deposit. It is also returned when they leave.

If your wallet says “deposit”, read it as “money parked for a while”, not “money gone”.

What fees cannot do

Fees are low, but they are not zero, and they are not fixed in euros or dollars. The formula is in ADA. If the price of ADA rose ten times, the fee in euros would also rise ten times.

The numbers in the formula are protocol parameters: settings of the network. They can be changed through Cardano’s on-chain governance, where DReps and the Constitutional Committee vote. That is good, because the community can lower fees if ADA becomes expensive. It also means the 0.17 ADA in this article is true today, not forever.

And fees say nothing about safety. A cheap transaction to a scammer is still a lost transaction. Always check the address before you sign.

How to see your own fees

Every wallet shows the fee on the confirm screen. After you send, you can open the transaction on an explorer such as CardanoScan and see the fee down to the last lovelace. Try it once with a small amount. It is a nice way to see that the formula really works.

It takes two minutes, and after that a Cardano fee is no longer a mystery number on a confirm screen.