Min Fee B

Cardano has around 30 network parameters. Parameters are the mechanisms that control how the Cardano Blockchain works.

Today, we are exploring a parameter that serves as the foundation of Cardano’s economic security model. Our parameter for the day is the min_fee_b parameter. In a previous installment in the series we wrote about its counterpart min_fee_a. Unlike min_fee_a, which scales with transaction size, min_fee_b is more fundamental: the baseline cost that every single transaction must pay, regardless of its size or complexity.

When a transaction is made on the Cardano network, a certain fee is associated with it. This fee serves several functions: it remunerates the stake pool operators for running the network, it incentivizes pool delegators with staking rewards, it helps replenish the Cardano treasury, and it prevents spam transactions. The full fee equation has two parts: min_fee_a and min_fee_b. While the min_fee_a portion scales with the transaction’s byte size, min_fee_b is the constant that ensures every transaction pays a baseline cost.

Here is the full calculation:

fee = min_fee_b + (min_fee_a * size of the transaction in bytes)

Currently, min_fee_b is set to 155,381 lovelace (approximately 0.155381 ADA), making it the fixed component that every transaction must pay before any size-based calculations. Regardless of size or complexity, whether you’re sending 1 ADA or 1 million ADA, whether your transaction is 200 bytes or 2000 bytes - you’ll always pay (at least) this baseline amount.

Why this is interesting

The reason for having parameter ‘b’ is the prevention of Distributed Denial of Service (DDoS) attacks: even a very small dummy transaction should cost enough to hurt an attacker who tries to generate many thousands of them. The beauty of the min_fee_b parameter lies in its role as Cardano’s economic firewall. Unlike dynamic fee markets that fluctuate with network congestion, min_fee_b establishes a consistent economic barrier that makes spam attacks prohibitively expensive while remaining fair for legitimate users.

Why you might care

Every time you interact with Cardano—sending ADA, trading tokens, minting NFTs, or engaging with DApps—you encounter min_fee_b. It’s the constant in an equation that ensures network sustainability. Transaction fees are fixed and predictable, and min_fee_b is the anchor that makes this predictability possible.

Understanding this parameter reveals Cardano’s approach to economic security. In a DDoS attack, an attacker tries to flood the network with dummy transactions, and if he has to pay a sufficiently high fee for each of those dummy transactions, this form of attack will become prohibitively expensive for him. The min_fee_b parameter ensures that even the smallest transaction carries enough economic weight to deter malicious actors.

These fees, including the min_fee_b component, are added to a rewards pot. Every 5 days, rewards in the pot are distributed to not just stake pool operators but stake pool delegators like yourself. Every ADA holder that stakes their ADA benefits from the fees collected from all transactions on the network, with min_fee_b providing a steady, predictable baseline to this reward mechanism.

The Economics of Baseline Security

The current value of 155,381 loveless wasn’t chosen arbitrarily. In order to arrive at the particular values for parameters ‘a’ and ‘b’, IOG’s research considered factors such as computational costs, storage requirements, and the economic threshold needed to prevent abuse.

In late June 2024, Cardano experienced an unsuccessful DDoS attack where a hacker tried to congest the network by spamming transactions that executed numerous smart contracts. In the end the attacker had to spend 1000 ada and thanks to the min_fee_b, ultimately failed to cause significant downtime, and the network remained resilient, demonstrating its decentralized nature and strong security measures. You can read more at: https://cardano.org/news/2024-06-28-media-cardano-survives-a-distributed-denial-of-service-attack-lloyd-duhon/

The Bigger Picture

The min_fee_b parameter represents more than just a number—it’s a manifestation of Cardano’s commitment to economic sustainability and attack resistance. Moreover, transaction fees are fixed and predictable. To compare, smart contract execution costs on Ethereum vary depending on the network load, with fees fluctuating from $5 to hundreds of dollars… Moreover, even failed Ethereum transactions may also incur fees, creating additional uncertainty about pricing.

While other blockchains rely on dynamic fee markets that can price out users during high demand, Cardano’s min_fee_b ensures a stable, predictable baseline that treats all users fairly regardless of network conditions. This creates an environment where developers can build applications with predictable economics and users can transact without fear of sudden fee spikes.

Understanding the nuances of a blockchain’s operational parameters is paramount. The min_fee_b parameter is a testament to Cardano’s foresight in crafting an economic model that balances accessibility with security. When evaluating the merit of any blockchain platform, understanding such intricacies can offer insights into its long-term viability and the thoughtfulness of its design.

The min_fee_b parameter stands as proof that sometimes the most elegant solutions are also the simplest: a single constant that protects an entire network while ensuring fair access for all.