How are the fees calculated?

You might be aware that in order to run the Cardano blockchain, stake pools collect a fee. But do you know exactly how much and how the fees are collected ? Let’s dive in into the details.

How are fees collected?

The fees are automatically are automatically distributed to the stake pool owner at most 2 epochs (10 days) after a block is minted by the pool

How much does the pool collect?

Fees are determined by two parameters, a fixed fee and a variable fee.

Fixed fee: The protocol of Cardano makes mandatory for that fee to be at least 340 ADA.

Variable fee: That fee can be anywhere between 0% and 100%

At the end of every epoch, the protocol computes the fees based on the fixed and variable fee, and the amount of block that have been minted by the pool.

Let’s take the example of this pool. It has a fixed fee of 340 ADA and a variable fee of 0%. Let’s assume each block is worth 1000 ADA

In the event that the pool mints 2 blocks in an epoch (2000 ADA), the protocol will distribute 340 ADA to the pool owner and the remaining 1660 ADA to the delegators.

Do I personally need to pay the fees to the pool ?

No, the fees collected by pool are collective to all the delegators of the pool. The rewards that are displayed by your favorite wallet when you collect them, already accounts for the collected fees. Therefore all amounts displayed in your wallet are yours.

What if the pool does not mint a block?

If no blocks are minted by the pool for a given epoch, no fees are collected by the pool.

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