Given that the new token will be on a Ethereum L2 chain, this seems like something people may want to be aware of and to think about:
From Google Gemini AI:
The trading fees on Ethereum Layer 2 (L2) networks are influenced by several factors:
1. Base Layer Fees:
Ethereum Gas Price: The gas price on the Ethereum mainnet directly impacts L2 fees. Higher gas prices on Ethereum lead to higher L2 fees as transactions need to be settled on the mainnet.
L2 Network Fees: Each L2 network has its own fee structure, which can vary in terms of base fees, transaction volume, and other factors.
2. Transaction Volume:
Network Congestion: When an L2 network experiences high transaction volume, fees may increase to manage demand and ensure efficient network operation.
Fee Mechanisms: Some L2 networks use dynamic fee mechanisms that adjust fees based on network congestion, similar to how Ethereum’s gas auction works.
3. Token Economics:
Token Supply and Demand: The supply and demand dynamics of the L2 network’s native token can influence fees. If the token’s value increases, fees may also rise to maintain the network’s economic equilibrium.
Staking and Governance: The way the L2 network is governed and the role of staking can impact fee structures. For example, stakers may receive a portion of transaction fees, incentivizing them to maintain network security and efficiency.
4. Off-Chain Scaling Solutions:
Optimistic Rollups: These L2 solutions often have lower fees compared to ZK-rollups due to their different security assumptions.
ZK-Rollups: While ZK-rollups generally have higher upfront costs, they can offer lower transaction fees in the long run, especially for high-volume applications.
5. Layer 2 Network Design and Optimization:
Efficiency: The design and optimization of an L2 network can significantly affect its fee structure. More efficient networks can handle higher transaction volumes while maintaining lower fees.
Security: The security measures implemented by an L2 network can also impact fees. More secure networks may require additional computational resources, which can contribute to higher fees.
6. Specific L2 Network Policies:
Fee Tiers: Some L2 networks may offer different fee tiers based on transaction priority or other factors.
Fee Caps: Certain L2 networks may impose fee caps to prevent excessive fees during periods of high congestion.
It’s important to note that the fee landscape for Ethereum L2 networks is constantly evolving. New L2 solutions and innovations may introduce different fee models and pricing mechanisms in the future.
From Perplexity
Layer 2 (L2) solutions on Ethereum have significantly reduced transaction fees compared to the Ethereum mainnet. Here’s an overview of the average fees on some popular L2 networks:
Current Fee Landscape
As of the latest data, L2 fees have dropped even further following Ethereum’s Dencun upgrade:
Optimism: Approximately $0.04 per transaction
Base: Around $0.03 per transaction
Arbitrum: About $0.40 per transaction
zkSync and Zora: Also experienced fee reductions
Fee Comparison
To put these fees in perspective:
L2 Solution
Approximate Fee
Optimism
$0.04 - $0.09
Base
$0.03 - $0.09
Arbitrum
$0.09 - $0.40
zkSync Era
$0.07
Loopring
$0.04
These fees are significantly lower than Ethereum mainnet fees, which can range from $1.10 to $5.48 for simple transactions.
Factors Affecting L2 Fees
L2 fees are influenced by several factors:
Gas usage
Batching costs
Data storage costs
Network congestion
Fixed fees set by the network
Recent Developments
The Dencun upgrade on Ethereum has led to further fee reductions on L2 networks. This upgrade introduced “blob” transactions, allowing L2 solutions to store data more efficiently and reduce costs by up to 90%.It’s important to note that while L2 solutions offer significantly lower fees, the exact amount can vary based on network conditions and the specific type of transaction being performed. However, in general, L2 solutions provide a much more cost-effective option for Ethereum transactions compared to the mainnet.
I posted because your post was not measurable, in all honesty I don’t want to talk about txfee. My ideas about that is crystal clear, 1 nano 1 tx on the Network…
Trading fees on Ethereum Layer 2 (L2) solutions are influenced by a combination of technical, economic, and network factors. Here’s an in-depth look at the key elements that affect these fees:
Underlying Layer 1 Gas Costs:
Transaction Settlement on L1: Many L2 solutions batch and compress transactions before submitting them to the Ethereum mainnet (Layer 1) for final settlement. High gas prices on L1 can increase the cost of this process, which is often passed on to users as part of the L2 fees.
Data Availability Costs: Some L2s post transaction data on L1 to ensure data availability and security, incurring additional gas fees.
Type of Layer 2 Solution:
Optimistic Rollups vs. ZK-Rollups: Different L2 architectures have varying computational and verification requirements. For instance, ZK-Rollups involve generating zero-knowledge proofs, which can be computationally intensive and affect fees.
State Channels and Sidechains: Other L2 methods like state channels or sidechains have their own fee structures based on their operational mechanisms.
Network Demand and Congestion on L2:
High Usage Periods: Increased activity on an L2 network can lead to congestion, causing sequencers or validators to raise fees to prioritize transactions.
Scalability Limits: If an L2 has not scaled adequately to handle user demand, fees may rise as users compete for limited resources.
Validator or Sequencer Fees:
Operational Costs: Entities responsible for processing and ordering transactions on L2 networks (like sequencers in Optimistic Rollups) may charge fees to cover their operational expenses.
Profit Margins: These entities might adjust fees to maintain profitability, especially in less competitive environments.
Bridging and Withdrawal Costs:
Asset Transfer Fees: Moving assets between L1 and L2 (and vice versa) involves transactions on both layers, incurring additional fees.
Withdrawal Delays and Costs: Some L2s, like Optimistic Rollups, have challenge periods for withdrawals, which can make the process more expensive due to additional security measures.
Decentralized Exchange (DEX) Protocol Fees:
Swap Fees: DEXs operating on L2s may charge their own fees for facilitating trades, independent of the network fees.
Liquidity Provider Fees: Fees paid to liquidity providers can vary based on the trading pair and the DEX’s fee structure.
Token Economics and Price Volatility:
Fee Token Value: If the token used to pay fees on the L2 appreciates in value, the cost of fees in fiat terms may increase unless adjusted.
Incentive Programs: Some L2s offer token incentives that can offset fees, at least temporarily.
Liquidity and Market Depth:
Slippage Costs: Low liquidity in certain trading pairs can lead to higher slippage, effectively increasing the cost of trades.
Market Maker Activity: Active market makers can improve liquidity, reducing slippage and trading costs.
Competition Among L2 Solutions:
Fee Wars: As multiple L2s compete for users, they may lower fees to attract more activity.
Innovation and Efficiency: Advances in technology can lead to more efficient L2 solutions with lower operational costs, allowing for reduced fees.
Security Measures and Protocol Overheads:
Anti-Fraud Mechanisms: Costs associated with fraud proofs in Optimistic Rollups or validity proofs in ZK-Rollups can impact fees.
Compliance and Regulation: Implementing features to comply with regulatory requirements may introduce additional costs.
Miner/Maximal Extractable Value (MEV) Mitigation:
Priority Fees: Users may pay higher fees to prioritize their transactions and avoid negative impacts from MEV.
MEV Protection Protocols: Implementing protocols to protect against MEV can introduce additional computational overhead.
Technical Optimizations and Upgrades:
Protocol Improvements: Upgrades that enhance scalability and reduce computational requirements can lower fees.
Client Efficiency: More efficient client software can process transactions at lower costs.
Economic Policies of the L2 Network:
Fee Models: Whether the L2 uses a fixed-fee model, dynamic pricing, or auction-based fees can affect costs.
Subsidies and Grants: Some networks may subsidize fees to encourage adoption, affecting the actual fees paid by users.
Infrastructure and Maintenance Costs:
Node Operations: Costs associated with running nodes and maintaining the network infrastructure can influence fees.
Third-Party Service Fees: Use of oracles, data providers, and other third-party services may add to the overall fees.
In summary, trading fees on Ethereum L2s are influenced by a complex interplay of network dynamics, technical architecture, market conditions, and operational costs. Users looking to minimize fees should consider these factors when choosing an L2 solution or planning their trading activities.
Thanks for the info, although I do not agree with the approximate fees for the L2s, your quotes are much higher then what I have experienced. I just opened up one of my wallets, and the actual price to send were:
Base was 0.00000022 ETH = $0.00052 to send ETH on Basechain
Would also be interesting what happens on high demand, how much that will affect things, how large of a network can a L2 handle before fees getting high. That fees are low on low demand is one thing.
I have never deemed gas in L2s to be unbearable. Even a 20x in gas price, according to my quotes would be about $.01 transaction fee. Also as various L2s build and become more efficient, I predict this should continue to decrease.
Any time I have seen ETH mainnet gas too high (popular NFT collection minting like Otherside land, big market corrections, security breaches), I just come back a few hours or days later, but that’s not always practical.
One thing to note is the L2s can handle the scale we currently have, but depending on how the network grows/expands, there could be scaling issues down the road.
Sorry don’t mean to sound harsh, but when it comes to txfees, storage, domain names, tradingfees etc. All these things should cost 1 nano, just out of respect for our fellow human beings living a little above or beneath the poverty threshold. I spend 12 years looking at transaction costs they are needed for cryptocurrencies, because crypto’s need fiat. This Network doesn’t need fiat and it would be a waste of time to not use it to tranfer crypto’s.
I’m happy to talk about the Network’s API, txfees on l2s? Please no…
Gonny just give it up about this 1 nano per Tx stuff, please…?
Its been thoroughly debunked by most on here who have a clue - and for several weeks now.
Its really starting to get annoying cos it won’t work - and a lot clever folk than me have told you why - repeatedly.
but just cos one of your ideas is crap, it doesnt mean they all are.
So please don’t take it too personal, Eddie. I m usually very happy to hear what you have to say. Usually
to get a better idea on current tx costs (in usd) check CryptoStats for ZK-Sync, Optimism, Abitrum and Polygon.
But still we should care that we are not sending transaction but rather interact with smart contrtact which normally costs 2-10x times more expensive and depends on the effeciency of the contract.
@19eddyjohn75 your heart is in the right place brother, I get it. You’ve always been one of the most generous people here too, so I know you walk the walk. Props
token will be on a Ethereum L2 chain, this seems like something people may want to be aware of and to think about:
