#CryptoFees101

Below is a comprehensive explanation of cryptocurrency fees, covering their types, structures, and strategies for optimization. Key insights are synthesized from authoritative sources within the search results.

### ⛓️ 1. **Blockchain (Gas/Network) Fees**

- **Purpose**: Paid to miners/validators for processing transactions on a blockchain (e.g., Ethereum, Bitcoin). These fees prevent spam and prioritize transactions .

- **Calculation**:

- **Ethereum**: Fees depend on transaction complexity (measured in "gas units") and network congestion. During peak times, fees can exceed $60, but drop to ~$3 during low activity .

- **Bitcoin**: Fees vary based on transaction size (bytes) and demand. For example, fees ranged from $62.79 (April 2021) to $3.21 (July 2021) .

- **Dynamic Pricing**: Users can often set higher fees to expedite transactions during congestion .

### 💱 2. **Exchange Fees**

- **Trading Fees**:

- **Maker-Taker Model**: Makers (adding liquidity) pay lower fees (e.g., 0.05–0.15%), while takers (removing liquidity) pay 0.1–0.25% per trade .

- **Spread Fees**: Hidden cost from bid-ask differences. On Coinbase Standard, a $387.48 spread loss occurred on a 1 BTC buy/sell .

- **Deposit/Withdrawal Fees**:

- Fiat deposits (e.g., ACH) are often free, but credit card deposits incur 3–4% fees.

- Crypto withdrawals vary by exchange (e.g., Kraken charges fixed fees per coin) .

- **Staking Fees**: Exchanges like Coinbase take 15–25% of staking rewards as fees .

### 💸 3. **Other Fee Types**

- **Loan Fees**: Charged by lending platforms for borrowing crypto (variable rates based on collateral and duration) .

- **Custodial Fees**: Rare but apply to institutional services (e.g., Gemini’s 0.4% custody fee) .

- **Tax Implications**:

- Transaction fees reduce capital gains by increasing cost basis (e.g., $100 BTC purchase + $5 fee = $105 cost basis) .

- Staking/mining rewards are taxed as income at receipt value .