Anchor Network (Fees)

[Obim34]

I had USDT Tron (TRC20) in my trust wallet which i tried to withdraw but the fee was a killer, very high to pay for that amount. I tried different escape route even consulted but still could not manage the fee.

First try was importing the wallet into Cake Wallet with attempt to swap into LTC which has lightweight on fees, but it didn't work as the provider don't permit.

Second trial was also importing to TronLink, the actual wallet for Tron Blockchain yet the fee remained the same. It was clearly obvious i couldn't withdraw without spending ~ $4.4 for $19 withdrawal.

My question is, why allow many Anchor Network when the fees are very high compared to others?

A brief note to those who may not understand Anchor Network: Anchor Network is the blockchain in which a token operates. Mostly stablecoins like USDT - USDC - BUSD all have anchor network at which they operate.

All fees during spending are paid using native coin of the blockchain they exist. Example - USDT Tron fee will be paid with TRX while USDT BSC will be paid with BNB

These are popular Anchor Network for USDT, there are many more.

Currency	|	Network	|	Symbol	|	Fee Ranking	|
USDT	|	Ethereum	|	ERC20	|	Highest	|
USDT	|	Tron	|	TRC20	|	High	|
USDT	|	BNB Smart Chain	|	BEP20	|	Low	|
USDT	|	Solana	|	SOL	|	Low	|
USDT	|	Arbitrum Network	|	ARB	|	Low	|
USDT	|	Polygon POS	|	MATIC	|	Low	|
USDT	|	TON Network	|	TON	|	Low	|

[Felicity_Tide]

~snip

My question is, why allow many Anchor Network when the fees are very high compared to others?

USDT is universal as far as cryptocurrency is concerned, and every services like Cex, custodial wallet, etc, that uses it, have a preferable Anchor. Some even give you an option of using all the network, but with caution so you won't send to a wrong network.

See it like your normal ISP like MTN, GLO, and the others. Just because GLO offers a cheaper data plan doesn't mean that the others shouldn't exist. It is a matter of choice. Not sure of how to explain it, but you can see it as different services that are being offered to you.

I hope I understood your question right.

[Mia Chloe]

A brief note to those who may not understand Anchor Network: Anchor Network is the blockchain in which a token operates. Mostly stablecoins like USDT - USDC - BUSD all have anchor network at which they operate.

The thing is, because many people use CEX they don't need to have coins on the anchor network for fees because the exchange covers it unknowingly to them. USDT doesn't  have a primary network rather its like a sub on many other networks and you can't pay for fees with a sub rather it must be the native coin of that network.

It's same thing with those tokens and memes on a network like Solana needing some Solana as gas fees before you can transact.

[Obim34]

I hope I understood your question right.

Yes, you ticked the right boxes.

The thing is, because many people use CEX they don't need to have coins on the anchor network for fees because the exchange covers it unknowingly to them.

You are right, the fees are much suitable sending from CEX, exchange like Bybit carries less fees compared to custodial wallets.



How does CEX make profits from taking minimal processing fee, whereas fees should be going directly to the miners or validators. Just in the case when i spent $4.4 on Tron network while CEX (Bybit) withdrawal fee for same USDT Tron is just $1.

[Asiska02]

How does CEX make profits from taking minimal processing fee, whereas fees should be going directly to the miners or validators. Just in the case when i spent $4.4 on Tron network while CEX (Bybit) withdrawal fee for same USDT Tron is just $1.

Exchanges have fixed withdrawal fees and they do it because of their retails investors that won’t like price fluctuations when sending out money to another wallet.

Exchanges still make money from their minimal processing fees because they process your transactions into another blockchain you’re using to transfer the money out as combined (batch transactions) and pay the fees at once. They may also have an agreement with the exchange privately on how to settle for transactions coming from them into their blockchain to reduce costs for them.

Lastly, the price of transaction fee for some blockchain is lower than what your exchange may be charging you, so they’ll process the transaction and keep the difference in amount for their own profit. Exchanges can still stake native tokens of an exchange privately using a private wallet, so when processing a transaction through their blockchain it will also reduce cost.

Exchanges are profitable platforms and just because you’re seeing minimal processing fees doesn’t mean they’re not profiting from the transactions.

[Mia Chloe]

How does CEX make profits from taking minimal processing fee, whereas fees should be going directly to the miners or validators. Just in the case when i spent $4.4 on Tron network while CEX (Bybit) withdrawal fee for same USDT Tron is just $1.

They make profits in Many ways. Firstly, they make some from the top coins they Hodl like Bitcoin and Ethereum which explains why you see their large reserves. Secondly they make one of the highest amounts from what they charge you as both slippage and fees when you intend to place a trade which explains why almost all of them offer leverage trading in addition to all these some mine and have pools.

The reason you see them reducing fees as much as possible is mainly to draw customers since people are happier to use a service when they can't tell how fees are deducted ( it's normal psychology).

[Orpichukwu]

How does CEX make profits from taking minimal processing fee, whereas fees should be going directly to the miners or validators. Just in the case when i spent $4.4 on Tron network while CEX (Bybit) withdrawal fee for same USDT Tron is just $1.

They spent much less than that to execute your withdrawal; you spent that amount because you used something. I do feel like Trust Wallet and some other wallets have their own fee percentage based on how they charge high, and for this exchange, each time you make some withdrawal, they don't only send you coin; they add it with that of others to send it through the same fee rate, leaving them with the fee paid by other customers.

[Zaguru12]

They spent much less than that to execute your withdrawal; you spent that amount because you used something. I do feel like Trust Wallet and some other wallets have their own fee percentage based on how they charge high, and for this exchange, each time you make some withdrawal, they don't only send you coin; they add it with that of others to send it through the same fee rate, leaving them with the fee paid by other customers.

The transaction fee is always lower than the exchanges charges and that’s why when the transaction fee on some blockchain are higher many exchanges raises the transaction charges on their platform. Trustwallet is a wallet and not an exchange it doesn’t requires transaction charges like exchanges but uses the transaction fee from the blockchain to actually for process transfers. The major reason why we see high fees on trustwallet is simply because of the fact that the wallet client actually uses high transaction fee for high priority transactions conformations and this can be changed to any amount you wish to actually use, just that if transaction get stucked  as miners actually prioritize transactions base on fees it will be hard for you to get your transaction confirmed or dropped from the memepool. That’s why the best form of wallet to use is to use are those wallets that supports RBF such that after setting a lower fee you can immediately increase it after if a transaction gets stucked.

As for OP, Exchanges have network options to actually withdraw a particular coin simply because they want to widen their reach to just everyone. You might think that deposits from a certain chain is useless to you but it is what another person needs, so all anchor networks needs to be there for global reach of Customers