Transaction fees on the Solana blockchain

Beginner

June 22, 2022

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Costs and fees for transactions on the Solana blockchain

Introducing Solana fees and transaction costs

In the rapidly evolving blockchain landscape, transaction fees represent a critical factor for users and developers when selecting a network. Solana has positioned itself as one of the most cost-efficient blockchain platforms available today. This article examines Solana fees in detail, providing a thorough analysis of the transaction cost structure, comparisons with other blockchains, and insights into how these fees impact various use cases.

Solana was designed from the ground up to address the blockchain trilemma—achieving scalability, security, and decentralisation simultaneously. One of the most compelling features of the Solana blockchain is its remarkably low transaction fees, which typically range between $0.0001 and $0.0025 USD per transaction. This fee structure represents a significant advantage over many competing blockchains.

The fundamental reason behind Solana's ability to maintain such low fees lies in its innovative architecture:

Proof of History (PoH) consensus mechanism
High throughput capacity, with theoretical peaks of up to 65,000 transactions per second
Efficient transaction processing and validation

These technical innovations allow Solana to process transactions at scale without requiring high fees to prioritise transactions during periods of network congestion, although priority fees can be used by users. For users of popular Solana-based applications such as Jupiter, Raydium, and Orca, this translates to substantial cost savings when compared to alternatives on more expensive blockchains.

Comparison with Ethereum and other blockchains

When evaluating Solana fees against other major blockchains, the differences become starkly apparent.

Solana

Average Transaction Fee (USD): $0.0001 - $0.0025

Ethereum (Layer 1)

Average Transaction Fee (USD): $1 - $20+ (highly variable)

BNB Chain (BSC)

Average Transaction Fee (USD): $0.05 - $0.20

Avalanche (C-Chain)

Average Transaction Fee (USD): $0.05 - $0.50 (variable)

Polygon (PoS)

Average Transaction Fee (USD): <$0.01 - $0.02

Ethereum, despite its widespread adoption, continues to struggle with high gas fees on its Layer 1, particularly during periods of network congestion. A simple token transfer on Ethereum L1 can cost anywhere from a few dollars to over $20 USD, while more complex smart contract interactions for decentralised finance (DeFi) operations can exceed $100 USD during peak usage. Layer 2 solutions on Ethereum offer significantly lower fees than its Layer 1.

This fee disparity becomes particularly significant for:

Frequent traders who execute multiple transactions daily
DeFi users performing complex operations like yield farming or liquidity provision
NFT creators and collectors conducting numerous minting and trading operations

For instance, a trader using Raydium on Solana might spend less than $0.10 USD in fees for 50 transactions, while the same operations on Ethereum-based Uniswap (on Layer 1) could cost tens or even hundreds of dollars during congestion.

Fee structure and cost breakdown

Understanding the Solana fee structure requires examining its primary components:

Transaction fee determinants

Solana fees are determined by:

Base fee: A minimal fixed cost applied to all transactions, currently 5,000 lamports per required signature.
Compute Units: Resources required to process the transaction, with an additional fee charged based on the compute units consumed.
Priority fees: Optional additional fees users can add to get their transactions processed faster by network validators, especially during high network demand.

The base transaction fee for a simple SOL transfer, requiring one signature and minimal compute units, is 5,000 lamports. One SOL is equal to 1,000,000,000 lamports. At a hypothetical SOL price of $150 USD, this base fee translates to roughly $0.0000075 USD. Most practical transactions involve more compute units and/or signatures, increasing the total fee slightly, though it typically remains very low.

Complex operations and their costs

More complex operations naturally require more computational resources and thus may incur slightly higher fees, though they still remain very affordable:

Simple SOL transfer: Typically starting from 5,000 lamports (e.g., ~$0.0000075 USD at $150/SOL).
Token swap on Jupiter, Raydium, or Orca: Often ranging from 10,000 to 50,000+ lamports (e.g., ~$0.000015 - $0.000075+ USD), plus any priority fee added by the user.
NFT minting: Can range from 20,000 to over 100,000 lamports (e.g., ~$0.00003 - $0.00015+ USD), depending on the complexity of the minting program and associated on-chain data.
Complex DeFi interactions: Can range similarly or higher based on the compute units used and the number of signatures required.

Even the most complex operations on Solana typically remain remarkably affordable, often costing fractions of a US cent to a few cents. This cost efficiency has contributed significantly to Solana's growing popularity among developers and users alike.

Impact of network congestion

While Solana fees remain consistently low, the inclusion of priority fees means they are not entirely immune to network congestion effects.

During periods of extreme network activity, such as major NFT launches or market volatility events, Solana priority fees can increase temporarily as users compete for blockspace. Notable congestion events occurred in its earlier years, such as in early 2022, where effective transaction costs might have briefly spiked, though still remaining significantly lower than Ethereum's baseline fees during its congestion periods.

The Solana community and developers have implemented several network upgrades to address congestion and improve fee markets:

QUIC protocol implementation for improved data ingestion.
Localized Fee Markets for transaction prioritisation, allowing fees to rise in specific congested parts of the network without impacting the whole chain.
Stake-weighted Quality of Service to ensure fair blockspace access.
Ongoing development of new, more efficient validator clients like Firedancer.

These improvements have substantially enhanced network stability and fee predictability, making Solana fees more reliable even during high-demand periods.

Fee efficiency for DeFi and NFT transactions

The efficiency of Solana fees becomes particularly apparent when examining specific use cases:

DeFi operations

For DeFi users, Solana offers exceptional value:

Liquidity provision on Raydium, Meteora, or Orca: Often costing less than $0.001 to a few cents USD per operation.
Yield farming interactions on Marinade Finance: Similarly low, typically fractions of a cent to a few cents USD.
Trading on Jupiter (aggregator): The transaction cost itself is very low, with the main cost being the underlying DEX pool fees which Jupiter routes through.

These minimal fees enable strategies that would be prohibitively expensive on Ethereum Layer 1, such as frequent rebalancing, yield optimisation, and arbitrage opportunities.

NFT transactions

The NFT ecosystem on Solana has flourished partly due to the low-fee environment:

Minting an NFT: Typically costing fractions of a cent to a few cents USD.
Trading on Magic Eden or Tensor: Similar low transaction fees per on-chain action.
Collection launches: Generally avoids the extreme "gas wars" common on Ethereum during popular mints.

This fee efficiency has democratised NFT participation, allowing creators and collectors with smaller budgets to engage with the ecosystem without prohibitive costs.

Solana vs Layer 2 solutions

As Ethereum has developed Layer 2 scaling solutions to address its fee issues, how do Solana fees compare?

Layer 2 solutions like Optimism, Arbitrum, and various zk-rollups have significantly reduced Ethereum ecosystem transaction costs, with fees typically ranging from $0.01 to $0.50 USD, and sometimes lower, especially after Ethereum's EIP-4844 upgrade (Proto-Danksharding) reduced data posting costs. While this represents a substantial improvement over Ethereum's base layer, Solana Layer 1 fees often remain lower than many Layer 2 transaction fees.

Key considerations when comparing Solana to Layer 2 options:

Solana offers native Layer 1 scalability without requiring bridging to a separate execution environment or the associated complexities for users.
Layer 2 solutions typically inherit Ethereum's security for final settlement but introduce their own specific trust assumptions or operational components, such as sequencers, provers, or challenge periods.
Solana provides consistent low fee structures across all applications natively on its Layer 1.

For users prioritising the absolute lowest Layer 1 transaction fees and native single-chain simplicity, Solana continues to offer compelling advantages.

Check out our other articles on the Solana blockchain:

Future of Solana fee model and optimisations

The Solana fee model continues to evolve, with several developments on the horizon or currently being refined:

Planned optimisations

The Solana development community is actively working on:

Refinements to Localized Fee Markets: Enhanced mechanisms for transaction prioritisation during congestion.
Ongoing improvements to Stake-weighted Quality of Service: Ensuring better quality of service based on stake weight.
Continued optimization of parallel transaction processing (Sealevel) and validator client performance (e.g., Firedancer): Further increasing throughput and network efficiency, which indirectly impacts fee stability.

Sustainability considerations

While Solana's low-fee model provides immediate benefits to users, questions about long-term economic sustainability are common for any blockchain. Both Solana and Ethereum (post-EIP1559) utilize a combination of transaction fees (a portion of which are burned on Solana, similar to Ethereum's base fee burn) and token issuance (inflation) to reward validators/stakers. The exact balance and economic impact differ and continue to evolve for both networks.

The Solana Foundation and community explore balanced approaches that maintain the network's fee efficiency while ensuring validator incentives remain aligned with network security and performance.

Conclusion

Solana fees represent one of the blockchain's most significant competitive advantages, offering users and developers an exceptionally cost-efficient Layer 1 environment for a wide range of applications. With transaction costs typically well below $0.01 USD, Solana enables use cases that would be economically unfeasible on higher-fee blockchains.

As the ecosystem continues to mature, the Solana fee model will likely evolve to balance user affordability with network sustainability. For now, Solana remains at the forefront of Layer 1 blockchain fee efficiency, making it an attractive option for cost-conscious users across DeFi, NFTs, and other blockchain applications.

Understanding these fee dynamics is essential for anyone looking to maximise value when engaging with blockchain technologies, particularly for frequent users who can realise substantial savings by leveraging Solana's cost-efficient infrastructure.