Hi everybody, I am new to Algorand and I am just starting to learn about it. So far I read that Algorand allows for very small transaction fees around 0.001 algo. I was wondering: in the event of a solid increase in value of the algo token, wouldn’t 0.001 algo be a lot? If tomorrow 1 algo sells for 1k$ we would have 1$ fee per transaction.
In other words, is the cost of transaction priced actually in algo, or in its equivlent in fiat money? There is something I miss probabily.
hey there - if that were to occur, that would come as an economic proposal for change that the community would weigh in on. it could come from the Algorand Foundation or from the community at large.
I am not sure I get the point: do you mean that in generale the transaction fees are somewhat decided by the community? So that at the moment the community has agreed on the fact that 1mAlgo per transaction is ok?
Lowering transaction fees will also lower staking income. Why would the community approve such a proposal - which may be needed from a builders/business perspective - if it is not aligned with their incentives?
Right now transaction fees go to the FeeSink account specified in the genesis block. That account can ONLY spend TO the ‘reward’ sink from which rewards are paid out. However, there’s not a mechanism to automatically transfer that balance so without a consensus/code change the transaction fees are currently at least, effectively burnt.
If the fees were to get high enough, the ‘minimum fee’ is something on-chain and part of the consensus parameters. It’s easily changed.
However, keep in mind, even if ALGO was 1000 that would still only be .10 per txn which is miniscule compared to the sort of problems ETH is going through right now.
