Network Fees and Slippage: Why You Pay More Than You Expected
Many beginners are surprised that a trade costs more than the number shown. The cause is usually network fees, slippage, or the spread between buy and sell prices, hidden costs that add up over time.
Network fees (gas)
When you send a transaction on a blockchain like Ethereum you pay validators to process it. Fees rise with congestion and fall when it is quiet, and they vary with complexity: a simple transfer is cheaper than a swap through a smart contract. Layer-2 networks usually offer lower fees.
Slippage
This is the difference between the price you expected and the price the trade actually executed at. It grows when liquidity is thin, the trade is large, or price moves fast. On decentralized exchanges you set a maximum slippage, and if price moves past it the trade fails.
Spread and commissions
The spread is the gap between the highest bid and the lowest ask in the order book. Platform fees differ between makers and takers, and limit orders are usually cheaper than market orders.
How to cut the cost
- Do transfers in quiet periods if you are not in a hurry.
- Use limit orders instead of market orders for thinly traded assets.
- Compare fees across networks before transferring.
- Do not set slippage high, since that invites front-running attacks.
- Count total cost before making many small repeated trades.
A final tip
Include fees in your math: a trade where you gain 1% may turn into a loss after entry and exit fees. You can use the calculators on the tools page.