Michael Smolenski

Ha, fair point — went straight into explanation mode. FWIW, most existing Babel Fee projects only reached the concept phase, with limited token support and UX challenges. This proposal takes a fundamentally different approach — built on a new ledger primitive rather than smart contracts, and designed as an open system not controlled by one organisation. So less "another DApp approach" and more "let's do this properly as a protocol"

lol thank you for the explanation. You missed the point. I know what babel fees is. But there are multiple implementations and no one is using any solution to its full potential. There was a joke about Cardano having multiple dexes and still people building more dexes. I was just drawing an analogy here that we don’t need so many babel fees implementations.

Is Babel fees the new “another DEX” on #Cardano?

@PoohbearDao @IOGroup Yes, ADA. That doesn't change. Transaction fees remain collected in ADA by the SPOs

@MichaelSmoIO @IOGroup Very good. This is the sort of feature I always wanted blockchain to employ. Obviously it needs adoption to be enabled but I’m very impressed. Most probable, a stablecoin will be a preferred settlement currency. So, is the final settlement on chain in ADA?

With Babel Fees, someone receiving USDC on Cardano for the first time does not need to understand ADA. They just spend their USDC, and the blockchain takes care of everything else. “Could my parents use this? That is the test. Babel Fees passes it.” @MichaelSmoIO, Initiative Owner This is part of the Cardano Upgrades proposal. Voting closes 24 May. momentum.cardano.iog.io/proposals/card…

@PoohbearDao @IOGroup Yes, you can construct any complex transaction involving certain assets and then specify an unrelated asset (like IAG in your example) to cover the transaction fee. As long as a there is a provider willing to accept that token, then you're good to go

@MichaelSmoIO @IOGroup Can this be the case where say I’m transacting or trading between two tokens let’s say ADA and SNEK. Will I be able to nominate a third token say IAG to settle the fees in?

Yes, the MVP will deliver an open-source implementation as a reference for others to build their own providers. That said, providers are free to build closed-source implementations if they see a commercial advantage — they might combine Babel Fee provision with market making or other services. The options are endless with this architecture. It's a free-market driven system. And yes, the goal beyond the MVP is a wallet-neutral, provider-neutral system. First, we want to ship the MVP, learn from it, and prove its value. From there, there are various paths to take it to a fully open and permissionless system in the next phase. There's a lot of new technology and market dynamics at play in this design, so baby steps first

@MichaelSmoIO @MLabs10 Will the treasury-funded Babel Fees MVP be open-source, wallet-neutral and provider-neutral? The proposal mentions one initial provider and Lace integration. Is there a path for other wallets and Babel Fee providers to integrate, and when would that become open/permissionless?

Is anyone using the @MLabs10 Pisa fees implementation of Babel fees on Cardano? The cost was half a million Ada.

Yes, the design supports any Cardano native asset. It's a free-market system, so anyone can run a Babel Fee provider and choose which tokens to support based on what's economically viable. We'd expect all major native assets to be covered. And yes, providers will add a small margin for the service. Users can see the rates upfront in their wallet. They can configure the acceptable margin above the market rate that best suits them or accept the default set by their wallet

@IOGroup @MichaelSmoIO Will this be same for all Cardano native tokens insofar as gas fees can go through them. Ie transferring Snek the tx fee can be paid in snek? And, is there an associated additional cost associated with this tx to settle the fee in ADA?

Just to clarify — this does require a protocol change. Nested Transactions is a new ledger primitive being delivered in the Dijkstra hard fork. That's what makes this different from Ethereum's gasless/relayer pattern. This proposal funds building the first Babel Fee provider on top of that primitive Note: Nested Tx opens up other capabilities beyond Babel Fees but that is another convo..

@MichaelSmoIO @IOGroup I haven’t looked at it - but it sounds like you’re defining “permissionless” as 1/n offchain infrastructure and chained relaying rather than changing the protocol? Not a bad thing - but you probably shouldn’t call it Babel fees. It’s closer to Ethereum’s “gasless transactions”?

Good points to raise — we considered each of these in the design: 1. Min-UTxO and collateral were a major consideration. Nested Transactions allows the provider to cover both on behalf of the user, so the user never needs to acquire or hold ADA. 2. Yes, providers need to process the partial transactions sent by users and construct a complete, valid Nested Transaction for the network. That's how fee abstraction works — someone has to supply the ADA. 3. Users pay for the service, but they have control. They set the rate they're willing to accept, or use the default margin configured in their wallet. Wallets have aggregated rates from all active providers. Users who want fine-grained control can add conditions to route their transaction to the provider that best serves them. The competitive provider market is what keeps pricing honest.

@MichaelSmoIO @IOGroup Appreciate the reply, I missed that it will be a ledger primitive but there are still problems. 1. min-ADA is always there. 2. Barbel fee providers are needed for every tx 3. Users will need to pay exchange slippage and risk premium at every turn.

@InputEndorsers @MLabs10 You're welcome! Happy to answer any valid concerns

@MichaelSmoIO @MLabs10 Hey Michael, thanks for responding so fast. Actually, that was precisely my concern - whether you evaluated the other designs that were developed. I appreciate your response.

Some clarifications here: The video is referring to Babel Fees that will in the future be enabled via "Limited Liabilities" (renamed to Nested Transactions) — a highly anticipated new ledger primitive that will enable much more beyond just Babel Fees. It's a game changer. Nested Transactions (upcoming Dijkstra hard fork🤞) unlocks the Babel Fees design in this proposal. That's what this Cardano Upgrades proposal funds — building the first Babel Fee provider on top of it.

4 years later, are the Babel fees in the room with us right now? @ergo_platform has had them for years

Exactly. For those asking (rightly so) — what about the other attempts at Babel Fees and why is this one in Cardano Upgrades different? It's built on the upcoming (and highly anticipated) new ledger primitive Nested Transactions, which is a game changer. It enables: → Seamless UX → An open, permissionless protocol → Scalability Setting Cardano up for the long term. Setting Cardano up for the long term

Application-layer solutions and protocol-level implementations solve the same problem in very different ways. An application-layer solution proves that something is possible, but it does not guarantee that it is usable, scalable, or widely adoptable. Protocol-level support is about standardization, interoperability, and UX, things that individual dApps cannot solve on their own.

Yes, some teams have attempted to build smart-contract-based approaches to fee abstraction, and that work informed our research. When we evaluated the trade-offs, these smart-contract designs came with UX compromises — things like collateral requirements, oracle dependencies, or needing to interact through an intermediary app. This design takes a different approach by building on Nested Transactions, a new ledger primitive. That gives us an open, permissionless standard at the protocol level — not tied to any single team's contracts — which puts Cardano in a much stronger position long term.

@clarkalesna @IOGroup Was babel fees not done by fluid ? And mlabs ? So why did we fund them so much money if it’s still “coming”…

Babel fees is coming, we as a community need to support @IOGroup If you want Cardano to succeed you know what to do 🫡

Busy voting night. Token 2049 - Yes to both. Blockfrost — Yes Cardano Maintenance — Yes High Assurance Technical Collaboration — Yes Cardano Upgrades — Yes VacuumLabs (Plutus Enhancements) — Abstain Consensus Initiative — Abstain Pogun — No Midgard (L2 Scalability Initiative) — No Developer Experience Initiative — No All with rationales.

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