Introduction
Every blockchain transaction has to pay a fee to miners or validators – usually called “gas” or simply the transaction fee. On most networks, that fee must be paid in the native asset: BTC on Bitcoin, ETH on Ethereum, ADA on Cardano, and so on.
This creates a constant UX problem. If someone wants to send USDC to a merchant on Ethereum, they have to keep a balance of ETH for gas. If they want to swap USDC for BAT or AAVE, they still have to pay in ETH. New users are forced to hold a volatile token they do not actually want, just to move the assets they care about.
Ergo's Babel Fees are a different approach. Powered by Ergo's eUTXO transaction model, they enable users to pay network fees in almost any token they hold – while miners still receive ERG, the native coin, as usual.
What Are Babel Fees?
Ergo’s Babel Fees allow a user to submit a transaction without owning any ERG at all. Instead, they can pay the fee in another asset they already hold in the same address.
The fee token is swapped to ERG via an on-chain mechanism inside a special eUTXO called a “Babel box”. From the miner’s point of view, they still receive ERG like any other transaction. From the user’s point of view, they paid the fee in the token they actually use.
For example, a user might want to live entirely in SigmaUSD, Ergo's primary stablecoin. With Babel Fees, they can send SigmaUSD to another user and pay the transaction fee in SigmaUSD too – no need to top up ERG balances or touch centralized exchanges.
This design keeps miner incentives intact while giving both end users and miners more flexibility in how they interact with the network.
Why Babel Fees Matter
Babel Fees are a simple idea with big implications for user experience and adoption. Letting users pay fees with any token:
- Removes the need to maintain tiny ERG balances and constantly top-up wallets with a volatile asset – reducing centralized exchange touchpoints and simplifying accounting, especially for businesses.
- Lowers onboarding friction. “Cold wallets” that hold tokens but no ERG can still be used immediately, as long as a suitable Babel box exists.
- Enables gas abstraction for dApps: applications can hide the ERG fee complexity behind their own token, making DeFi feel more like using a regular app than managing a collection of gas coins.
How Babel Fees Work
Babel Fees are powered by Babel boxes: public on-chain liquidity resources that offer to swap a specific token for ERG at a predefined rate. Anyone can create a Babel box, including miners who will later use them.
- The user builds a transaction and attaches the token they want to use as the fee asset. It can be SigmaUSD, a governance token, or even an NFT.
- A miner evaluating the transaction looks up a relevant Babel box and checks the swap rate (X tokens per ERG), which is enforced by ErgoScript.
- If including the transaction yields slightly more ERG than the normal fee, the miner accepts it. They receive ERG immediately and never need to hold the user’s token.
- The token-for-ERG exchange happens automatically, on-chain, directly inside the eUTXO model – no DEX, no oracle, no trusted third party.
Miners are rational actors. If the exchange rate in a Babel box is too low, they simply ignore that box and the associated transactions will sit in the mempool until someone offers a better rate.
Because the mechanism is fully scripted and limited by the liquidity inside each Babel box, there are no new trust assumptions and no impact on consensus security.
Who Provides Babel Boxes?
Any user can lock ERG in a Babel box and quote an exchange rate for a specific token. This is similar to market making, but fully non-custodial and trustless: everything is enforced by ErgoScript.
Two kinds of actors have especially strong reasons to maintain Babel boxes:
- Miners: they can run their own Babel boxes, offering custom rates and capturing additional yield from fee flows.
- dApps and protocols: DEXes, lending platforms and other apps can create Babel boxes for their own tokens. This both improves UX and creates an extra revenue stream from spreads.
Babel box operators typically set rates with reference to the underlying market price of the token, but they do not have to mirror it perfectly. The free market of miners selecting transactions filters out uncompetitive offers.
Advantages Of Babel Fees
Babel Fees deliver benefits to different parts of the Ergo ecosystem:
- Better UX: users don’t need ERG balances to get started. Holding a single token can be enough for everyday usage.
- dApp flexibility: developers can abstract gas and let users pay purely in protocol tokens, directly aligning incentives between the app and its users.
- Scalability: the mechanism does not add extra load on consensus or miners; it simply changes how the same ERG fee is sourced.
- Security: miners always receive ERG and never risk being stuck with illiquid tokens. They only include profitable swaps.
- Predictable economics: the fee market remains denominated in ERG and is not exposed to the volatility of every other token on the platform.
Conclusion
Ergo’s Babel Fees are a practical, market-driven alternative to the default assumption that users must always pay gas in the native token. They turn fees into an on-chain exchange mechanism, not a hard UX constraint.
Thanks to the flexibility of the eUTXO model, anyone can pay fees in any supported token while miners still receive ERG quickly and securely. It’s a small change in fee plumbing that makes blockchains feel far more usable for real people and real applications.