How Do Decentralized Finance (DeFi) Option Protocols Handle the Equivalent of a Transaction Fee?

DeFi option protocols typically rely on network gas fees (e.g. Ethereum gas) for the on-chain transaction to create, buy, or settle the option.

In addition to gas, the protocol may charge a small fee (a protocol fee) which is often distributed to liquidity providers or the protocol's treasury. The premium itself is paid directly to the option writer or the liquidity pool, not as a transaction fee to a miner.