- A fee is a reward for a service. A transaction occurs when: Value to user >= Service provider cost + Fee.
- Fees are not the same as economic rents, though they are often conflated when discussing crypto.
- Rent-seeking is the practice of acquiring economic gain without creating value for users or society.
- In contrast, a fee can only be charged if the user values the service enough to pay it.
- If no new value is created yet wealth is redistributed to the organization, then it is a rent and not a fee.
- The most common form of rent-seeking in crypto is adding an unneeded native token.
- Many tokens exist solely for the project creators to form capital and profit from the appreciation of the token as there is no new value creation and there is only wealth redistributed from network participants to token issuers.
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