Fees Explained

We've received a few questions from Daedalus users regarding fees. Here are some important points to consider:

1. There is a transaction fee when transferring funds from Byron wallets to Shelley wallets. This is because transferring funds requires a transaction, and every transaction pays a fee, this protects the network against some attacks. 
2. There is a refundable deposit of 2 ada for registering a stake address. So, the first time you delegate to a pool you register your stake keys, by the protocol parameters this incurs in a KeyDeposit of 2 ada which you get back when you undelegate your wallet. 

How minUTxOvalue impacts fees: 

There is another factor playing a roll when calculating fees, namely: minUTXOvalue.  This is a parameter that determines the minimum size of a UTXO for it to be created. Currently it is set to 1 ADA and it is to be revised frequently depending on ADA market value. 

minUTXOvalue is a security parameter that prevents "flood attacks" making them costly. A flood attack is where malicious users could exploit the block size limit to overwhelm the blockchain with low-valued spam transactions, and cause delay in the verification of legitimate transactions.

So, at this moment and for the security of the network, the output of a transaction cannot be less than 1 ADA. This may impact what users pay as transaction fees. If the UTXO to be created as an output of a transaction is less than 1 ADA, this UTXO cannot be created and then that output is included as transaction fee. 

For example: 

A transaction of exactly 9 ADA that uses a UTXO containing exactly 10 ADA, pays a transaction fee of ~0.18 ADA. However, the output of such a transaction (the change of the transaction) would involve creating a new UTXO of roughly 0.82 ADA. This is not possible given the current minUTXOvalue. Therefore, this output is also included as transaction fee,  and this particular transaction would pay 0.18 + 0.82 as transaction fees.

In contrast, If instead of 9 ADA, this transaction is of 8.81 ADA and spends a UTXO containing 10 ADA, the transaction fee is also of ~0.18 ADA. But this time, the new UTXO that this transaction creates is greater than 1 ADA, a valid UTXO value. So this transaction only pays an effective transaction fee of ~0.18 ADA.

So, depending on the UTXOs used in a transaction and the new UTXO that the transaction creates, small increments or decrements on the amount to send may have an impact on the actual transaction fees paid.

You can check your wallet's UTXO distribution in Daedalus going to  More > Wallet UTXO distribution. 

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For more information about Wallet UTXO Distribution, please see Wallet UTXO distribution ​

For more information about fees, please see Cardano fee structure.