How does Cardano’s transaction fee stabilization mechanism work?
The Cardano (ADA) team is working on a solution to make cryptocurrency payments more predictable. The essence of stablefees, or stable fees, is to guarantee predictable and fair fees for users’ transactions. The latter is among the issues the industry needs to address.
The Stablefees mechanism involves a decentralized standby contract that manages a stable Basket Equivalent Coin (BEC) backed by a basket of assets. If a lack of liquidity begins to affect the contract, ADA can act as the reserve currency.
The system takes into account the size of the transaction and its computing power requirements. In times of high demand, additional metrics, such as system load, can be used. The system also introduces a so-called “oracle,” which determines the value of the basket in ADA.