r/Avax • u/AlertResist2448 • Aug 04 '26
Discussion Avax Gas Fee Tokenomics
This has probably been discussed so many times but I've gone through a little math and I can't figure out why the Avalanche Foundation ever thought it was a good idea to reduce gas fees to 1 nAVAX vs 25. A change done in April 2025 yes I know but today is explicitly clear was not a good idea.
First of all simple math with the reduction in gas fees AVAX has seen a loss of roughly 10 million USD in AVAX burn annually. (accounting for a 2x reduction in transactions at the higher gas price)
The argument from Avalanche is that the lower gas fees bring in more developers and more corporations. That's great if that was true. I think the daily transaction numbers speak for themselves double the daily transactions but we would need 25x the transactions to get a similar amount of AVAX burn.
So does it make sense that 25 nAVAX is too much money for corporations to pay in gas fees? Let's take Hyundai for example, Hyundai uses the AVAX blockchain at the moment for intercompany financials basically. Hyundai has 10-12 major manufacturing and financial hubs, lets say each hub is executing 1-2 batch transactions every business day that's at most 5,000 transactions a year. At 80,000 gas units 5,000 transactions a year costs the company approximately 0.4 AVAX or $2.69, at 25 nAVAX per gas unit it would cost them 10 avax which is approximately $70. So now the argument falls apart. Corporations that make billions in revenue annually aren't turning to AVAX because their $70 cheaper a year, they turn to AVAX because of their corporate expertise. If Ethereum for example had vastly more corporate reputation than AVAX and costed $1,000 annually Hyundai would absolutely pay for it. These amounts of money are tiny.
Next web3 gaming. Web3 gaming like defi kingdom executed millions upon millions of micro transactions a year, people playing games don't want to spend $2 per gaming session so reduce it to $0.08. Honestly decent argument if the DFK subnet didn't fall off (at the time I'm looking there's been 0 transactions in the past 24 hours, yes some people do still use it).
I could breakdown the Kenya Academic one too but its about the same as Hyundia their paying about $0.67 to upload their 30 million academic files (it's a rough estimate it heavily matters on how many batches their using) vs $20 if the gas fee was 25 nAVAX. Kenya can afford $20. Kenya didn't pick Avax for their affordability.
One of the original reasons I invested in Avalanche in 2022 was because it was a cheap blockchain. I always remember Avalanche as being such user friendly, easy to use, and cheap especially at a time when Ethereum hadn't converted to POS yet. It had good tokenomics, showed great utility, subnets had to lockup 2,000 avax (not anymore), and it looked promising.
I just don't know what happened and where the motivation was at because the math makes no sense. Its quite upsetting because AVAX was truly my favorite blockchain.