Solana Fee Model Explained: How It Differs from Ethereum

Author: Mert Mumtaz, Helius CEO; Translation: Golden Finance xiaozou

Solana's fee model is different from Ethereum, which is why most people on Crypto Twitter are confused at first. Solana's fees are divided into two categories: storage fees and transaction fees.

Transaction fees are the same fees you are used to on Ethereum, but there is a major difference. On Solana, fees are local to the application/smart contract you are interacting with. What does this mean?

On Ethereum, if an application (such as the previously popular Boring Ape Land Sale) takes up a lot of resources, then the entire chain fee will go up. Even if you have never used that application at all, as long as you do anything on the chain, including basic transfers, your fees will increase accordingly.

On Solana, the application fee is isolated. So no matter how high the transaction fee of that piece of land is, you can still send a transaction to another application at a lower fee.

You can easily get this by looking at the average fee and median fee difference of the Solana platform.

Another type of fee is called rent, which is for storing data on Solana.

For example, let's say you have a bank account with USD as the default currency. But let's say you want to receive Canadian dollars (because you're a jerk). To receive Canadian dollars, you need to open a Canadian dollar account first, because you can't deposit funds into a USD account. On Solana, you need to open a new token account to receive Canadian dollars. But it's important to note that this fee is fully refundable.

So if you open a Canadian dollar account and then convert back to USD, you can close your Canadian dollar account and receive the full fee.

Currently known shortcomings are as follows:

- Storage pricing is not modeled correctly.

- The native fee market is flawed in execution, but much better than it was before.

- The fee API for estimating predictable transaction landings is too immature to give definitive results.

At the time of writing, Solana's median fee is still around $0.003 (800-2400 user TPS).

When you see a random eye-catching screenshot on Twitter, you can almost certainly be referring to:

Storage fees (some exchanges will pay this for you because it's refundable, but Coinbase won't) - or it only applies to fairly competitive markets like shitcoin and doesn't reflect the fees of ordinary users.