What Is the Impact of Transaction Fees on the User's Incentive to Utilize a Layer 1 Network? ▴ Learn

What Is the Impact of Transaction Fees on the User’s Incentive to Utilize a Layer 1 Network?

High transaction fees (gas) significantly disincentivize users from utilizing a Layer 1 network, especially for low-value transactions. This can lead to reduced network adoption, lower overall transaction volume, and a decline in the network's economic activity (PQ).

Conversely, low, predictable fees encourage greater utility and adoption. The fee structure is a critical factor in the network's competitive positioning and its ability to sustain long-term economic growth.

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