When withdrawing funds to a cryptocurrency address, you may notice that Network Fees on Abra seem high. Network Fees are something we are constantly striving to reduce/optimize, but here are two scenarios where you may run into higher than expected Network Fees.
Scenario 1: Withdrawing “synthetic” cryptocurrency
Some of the cryptocurrencies offered on Abra are actually not the native cryptos themselves, but “synthetic” versions of the currency created using multisignature Bitcoin transactions as “collateral” on your phone. When you withdraw synthetic cryptos, it’s actually a Bitcoin transaction taking place “under the hood”, on the Bitcoin blockchain. Therefore, in many cases, the Network Fee incurred to withdraw funds will be higher than you would normally pay to perform a transaction with the non-synthetic (“native”) version of the cryptocurrency.
Scenario 2: Withdrawing “native” cryptocurrency
Withdrawing “native” cryptocurrencies from Abra, such as Bitcoin, Bitcoin Cash, Litecoin, or Ether. Abra often needs to gather multiple, smaller amounts of Bitcoin, for example, from your wallet to send your desired withdrawal amount. Technically, what we’re doing is combining multiple inputs, called “unspent transaction outputs”, or “UTXOs”, to create a single transaction.
It’s this combining of multiple UTXOs that can create larger than normal (in bytes) Bitcoin transactions, which cost more to be included in blocks by miners.
This is not necessarily the case for everyone - users who have only done a single Bitcoin deposit, for example, will not have multiple inputs (UTXOs) when withdrawing Bitcoin. However, a user who has done multiple, small Bitcoin deposits is likely to have a higher number of inputs to complete their withdrawal. By contrast, custodial exchanges may have very large UTXOs at their disposal for use amongst all of their users, so they are able to minimize the number of inputs used (and hence transaction size). Abra is non-custodial, so such optimizations are not currently feasible, but we strongly believe that the control of one’s crypto should reside in the user’s hands.
Please note, we generally opt to pay a relatively high fee to ensure our transactions get confirmed quickly. We intend to offer users a fee selection feature in the near future.