<aside> 💡 Chains such as Algorand, Solana, and Avalanche have almost negligible transaction fees. Unless one needs to make a large number of transactions, Tezos and Cardano also have the small enough transaction fees compared to Bitcoin or Ethereum. Solana and Cosmos show faster transaction speed than other chains. They are followed by Avalanche, Algorand, Tron, and Polkadot. Cardano has a little slower speed than those chains. Cardano can, however, theoretically achieve 1 million Transaction Per Second (TPS) by Hydra, a Layer 2 scaling solution. Ethereum after “the Merge” also potentially hits 100,000 TPS.

</aside>

Section 1. Transaction Fee

1.a. Computation of Transaction Fee

If the reward is the supply side of the incentive mechanism, the transaction fee determines the demand side of the incentives. The cheaper the cost per transaction is, the more demand the chain would acquire. In case the part of the reward comes from the transaction fee paid by the users such as Bitcoin, Ethereum, and Cardano, it is, on the other side, the less incentive for the agents to participate in the protocol. As explained in Ch.3.1. Ledger Model, Language And More, Cardano uses a UTXO-based blockchain, more specifically an eUTXO model (extended unspent transaction output). This makes Cardano’s transaction processing deterministic, i.e. a user can predict the cost of transaction execution and how the transaction behaves on the ledger before it is submitted. This feature is different from Ethereum where other network activity can influence the gas cost. Cardano’s design prevents the unexpected script validation failures, unexpected fees, or unexpected updates of ledger or script. The difference of transaction fee and its calculation method between chains is in the section 1.b. below.

1.b. Comparison across Chains

Table 6 shows transaction fees (in US dollars and in native tokens) by chain. Although it is difficult to compare transaction fees across chains due to the large price volatility of native tokens and different data sources and dates, chains such as Algorand, Solana, and Avalanche have, in general, almost negligible transaction fees. Tezos and Cardano also have the small enough transaction fees unless one needs to make a large number of transactions at once like the time of minting the collection of NFTs. Bitcoin and Ethereum show certain level of transaction fees, which could make a user consider to use other cheaper chains alternatively.

Table 6. Fee Per Transaction And Fee Calculation By Chain

| Chain | Cost 1 (USD/tx) | Cost 2 (per tx) | Date | Source | Fee Calculation | | --- | --- | --- | --- | --- | --- | | Bitcoin | 1.48 | 0.000059 BTC | 08/08/2022 | blockchain.com | https://bitcoin.org/bitcoin.pdf | | Ethereum | 0.641 | 0.00036 ETH | 08/08/2022 | etherscan | https://ethereum.org/en/developers/docs/gas/ | | Cardano | 0.19 | 0.35 ADA | 08/07/2022 | Cardano Blockchain Insights | https://docs.cardano.org/plutus/transaction-costs-determinism | | Tezos | 0.01 | 0.0031 XTZ | 03/09/2022 | academy.shrimpy | https://wiki.tezos.com/learn/whitepaper#fees | | Algorand | 0.00037 | 0.001 ALGO | 08/09/2022 | [algorand.org](https://developer.algorand.org/docs/get-started/basics/why_algorand/#:~:text=There is no concept of,001 Algos.) | https://developer.algorand.org/docs/get-details/transactions/?from_query=fee#fees | | Cosmos | - | - | - | - | https://docs.cosmos.network/main/basics/gas-fees.html | | Solana | 0.00056 | 0.0000051 SOL | 02/01/2022 | techdreams | https://docs.solana.com/transaction_fees | | Polkadot | - | - | - | - | https://wiki.polkadot.network/docs/learn-transaction-fees | | Avalanche | 0.000004 | 0.000000044 AVAX | 01/14/2022 | TECH Times | https://docs.avax.network/quickstart/transaction-fees |

1.c. Source of This Section

🔗 https://docs.cardano.org/plutus/transaction-costs-determinism

Section 2. Transaction Speed

2.a. Determinants of Transaction Speed

Speed of transaction influences the popularity of the chain as most users do not like the inconveniences of the slow speed. Consequently, the transaction speed is the critical part of the blockchain’s scalability. In general, the determinants of the transaction speed of the chain come from the following three factors: network load, transaction complexity, and frequency of a new block mining. Network load is determined by the current usage of the chain while the complexity of transaction is determined by the protocol algorithm the chain is employing. Frequency of a new block is determined by both; partially by current usage and partially by protocol algorithm.

2.b. Comparison with Other Chains

Table 9 below shows the comparison of transaction speed by chain from different sources. In general, Solana and Cosmos show faster transaction speed than other chains showing 2,825-50,000 Transactions Per Second (TPS) and 10,000 TPS respectively. The time per transaction is almost instant for both chains. They are followed by Avalanche, Algorand, Tron, and Polkadot. Those chains all show 1,000-5,000 TPS and less than 3 mins per transaction. Cardano has a little slower speed than those chains showing about 250 TPS and taking 10 mins per transaction, which is still much faster than Bitcoin or Ethereum before “the Merge.” Theoretically Cardano can achieve 1 million TPS (by Hydra, a Layer 2 scaling solution) and Ethereum after “the Merge” potentially hits 100,000 TPS. They are still under development, but have great potential to improve their transaction speed in the future. Also, this is the current transaction speed for each chain, and as discussed in the section 2.a, the speed of transaction is determined by a variety of factors. Therefore, it is uncertain whether the transaction speed will hold even if the number of users on those chains expands.

Table 7. Transaction Speed By Chain

Source of Table 7: 🔗 https://www.jumpstartmag.com/5-blockchains-with-the-fastest-transaction-speeds-in-2022/ 🔗 https://www.blockchain-council.org/cryptocurrency/top-cryptocurrencies-with-their-high-transaction-speeds/ 🔗 https://www.statista.com/statistics/944355/cryptocurrency-transaction-speed/ 🔗 https://www.analyticsinsight.net/top-10-cryptocurrencies-with-a-high-transaction-speed-in-2022/

🔗 https://wiki.tezos.com/learn/baking/proofofstake/consensus