Understanding How Fees Work On PAW Chain

‍PAW Chain Fees Roadmap‍

At PAW Chain, we’ve dedicated significant effort to designing a fee structure that balances affordability, sustainability, and long-term growth. Setting the right fees requires careful consideration of several factors, including transaction volume and potential inflationary trends.

For example, Solana operates with an inflationary model, paying validators with tokens through a 6.5% inflation rate. In contrast, many Layer 2 solutions use centralized sequencers without validators, which is why they can offer extremely low transaction fees. However, PAW Chain offers a sustainable fee structure that balances fair pricing for both large and small transactions. This structure rewards delegators and validators for running the network without increasing the token supply, as PAW is deflationary.

Instead of inflating the supply, the transaction fees collected by PAW Chain are used to directly support the growth of the PAW Token. This includes increasing liquidity, compensating validators for maintaining the network, and funding future developments.

With multiple utilities generating fees, we’ve categorized them to provide a clear explanation of how they are set and how they will adjust based on transaction volume. Our fee structure allocates 80% of fees to validators, with the remaining 20% directed to our treasury. Here’s a clear overview of how our fees are structured and how they will adapt as the network scales.

In the graphs below, you can see how fees decrease as transaction volume increases. The first line represents volumes ranging from $0 to $500,000, detailing the percentage charged along with the minimum and maximum fees. Each subsequent line illustrates how fee percentages will further decrease as volume levels rise. As transaction volume increases, the fee percentages will continue to decrease, providing users with lower costs. For example, on a $1000 USD transaction, you’ll see a clear reduction in fees as the volume grows, helping to illustrate the cost savings involved.

‍

In the above chart, you can see how the fee will decrease as volume grows, from 0.05% down to 0.02%, while never exceeding a fee of $5.00, regardless of how many tokens you transfer.
‍

In this model, the minimum fee will be set at one dollar, while the maximum fee will not exceed $25. As PAW Chain’s transaction volume increases, the fee will decrease from 0.5% to 0.3% once we reach a consistent volume of $500 million.

‍

The bridging fee will have a minimum of $5.00, with a maximum capped at $50. As transaction volume grows, the fee percentage will decrease from 1% to 0.5%.

‍

The Bridging-In fee will have a minimum charge of $2.50, with a maximum cap of $25, regardless of the number of tokens bridged in per transaction. As our platform scales and transaction volumes increase, the fee percentage will also decrease from 0.5% to 0.3%.

‍

Like our other fees, the Aggregated Swap Fees will decrease as transaction volume increases, starting at 1% and lowering to 0.5%. The maximum fee will always be capped at $25.

When using MetaMask to swap tokens into the bridge, the initial gas fee will be taken by MetaMask for that transaction. However, there’s an additional cost to send the tokens back to the chain, which MetaMask doesn’t account for in its fee display. This means users will encounter an extra fee when receiving the bridged tokens back onto PAW Chain.

MetaMask’s gas fees depend on network congestion and the complexity of the transaction, so users need to account for both the initial and return transaction costs when bridging tokens.

‍

In our Liquidity Fee graph, you can see how fees decrease from 0.5% to 0.3% as transaction volume grows. The minimum fee for adding liquidity is set at $5, with a maximum cap of $25.

‍

Our swap utility fees are based on the dollar volume of transactions. The accompanying graph illustrates how these fees are allocated between the treasury and the LP provider. Initially, the fee will be 0.5%, but as our platform expands, it will reduce to 0.4%. While the treasury's share of the fees will decrease over time, the LP provider will receive a consistent percentage, ensuring ongoing support for the ecosystem.

‍

In the coming weeks, we will be gradually transitioning to the new fee roadmap as the development team begins integrating the fee structure into PAW Swap. This phased implementation ensures a seamless adaptation while maintaining the integrity of the platform and its services. The PAW Chain team has worked diligently to ensure that all fees are both sustainable and competitive with other platforms. We've carefully designed a fee structure that provides the necessary resources for PAW Chain's future growth, while also ensuring the treasury is well-funded to support a thriving ecosystem well into the future.

Share this post