PancakeBunny Fees Are Not High — Understanding Gas Fees and the Bunny Distribution
Hello Bunny Fam 🐰🐰🐰
One of the questions we are asked on a daily basis is why fees are so high on PancakeBunny. The short answer is THEY ARE NOT.
1.0. ON GAS FEES
For those of you new to DeFi, we would first like to provide a quick primer on what gas fees are and how they function.
1.1. Gas fees are the cost charged by the BSC network for executing transactions. THEY ARE NOT FEES PAID TO PANCAKEBUNNY.
Blockchains like Ethereum and BSC are essentially distributed computing networks that create and implement constructs such as tokens, vaults, and strategies. The maintenance of these constructs and the implementation of the operations that connect them require computing resources from the network in exchange for which the network collects gas fees from users. Changes in gas fees for a given transaction reflect variability in network costs that are determined by the degree to which the BSC network is congested at the precise moment that a transaction is submitted. When the network is congested by a high volume of transactions, gas fees go up, and when there are fewer transactions, gas fees go down. For example, at the beginning of February when the transaction volume on BSC was higher relative to network capacity at the time, the average gas fee per BSC transaction jumped to almost 30 Gwei, while now the average gas price has gone down to 5 GWEI.
1.2. Gas Price and Gas Limit Settings
Second, for every transaction that you submit, you as a user are required
1) to bid the number of GWEI that you will spend per unit of gas (the Gas Price) as well as,
2) to specify the maximum number of units of gas you are willing to spend to execute the transaction (the Gas Limit). Consider the following screenshot from a Metamask wallet. The default maximum Gas Price displayed is 5 GWEI. The default Gas Limit displayed is 573852. The transaction will not go through and will remain “hung” until the wallet is able to execute the transaction for values under these two parameters.
The next thing to notice is the displayed Gas Fee. In the above example, the Gas Fee is displayed as 0.002869. Note that here, this Gas Fee — displayed at the time you are being asked for your confirmation — is a simple estimation of the amount, in BNB, that will be deducted from your wallet to pay the BSC network upon successful execution of the transaction.
Once your transaction has gone through, in order to see the actual Gas Fee that you have paid to the BSC network for your transaction, you must use a scanner such as BSCScan to view the transaction (by using the scanner directly with the tx hash or by using the convenient link provided). Here is the result of the above transaction:
As you can see, the actual Gas Fee (called the “Transaction Fee” on BSC) was only 0.00120499 BNB, or $0.55 at the time of the transaction. This is because the actual amount of gas used by the transaction was only 42% of the Gas Limit set in Metamask at the time the transaction was submitted. The Gas Price paid was the same 5 GWEI bid at the time of submission.
You are not paying the displayed Gas Limit. The quantity of gas you actually spend on a transaction is typically MUCH LESS.
It is important here to clarify the most common misunderstanding among users new to PancakeBunny. PancakeBunny sets the default Gas Limit to a sufficiently high quantity in order to ensure that transactions will go through. As you can see in the above example, the default Gas Limit setting was about 150% higher than the number of gas that was actually paid. And so the reason that this first misunderstanding persists is because many users never confirm their REAL fees on BSCScan.
1.3. PancakeBunny Sets Higher Default Gas Parameters (i.e. GWEI, Gas Limit) Because Our Smart Contracts Are SMARTER
PancakeBunny sets default Gas Limits higher than other, simpler protocols for the simple reason that our smart contracts are SMARTER. The core of Team Bunny’s innovative approach to Defi lies in the design of smarter, more complex, composite strategies that succeed in generating above-market returns because the increases in gross APY delivered by our smarter strategies are higher than their price of execution because transaction costs on BSC are much lower than Ethereum.
This leads to a second misconstrual of the high default Gas Limit setting on PancakeBunny. Because our strategies are smarter, they require us to set the default Gas Limit higher than the default setting set by other protocols. The misperception that PancakeBunny charges higher fees. In fact, gas fees are somewhat higher, but they are incrementally higher in proportion to the complexity of and “how smart” our strategies are.
The fact that PancakeBunny sets the default Gas Limit higher than other, simpler protocols in order to execute smarter strategies, and the fact that many users do not confirm their real fees on BSCScan, are responsible for the perception that Gas Fees are significantly and materially higher on PancakeBunny. The difference between PancakeBunny and other protocols is immaterial in almost every instance, except where the amounts transacted are very small compared to the cost of execution. For very small transaction amounts when claiming or staking in very smart and complex strategies, these transaction fees can be daunting.
Remember, Gas Fees are not determined by the amount of a transaction, they are determined by the complexity of a transaction and the atomic network costs at the time a transaction is executed. At any given moment, the cost executing $1 or $1000 in any given transaction is the same. So for any given transaction, users must consider whether the amount they are transferring or claiming is enough to justify the Gas Fees they expect the BSC network to charge.
And the more complex the transaction — meaning the more network operations are involved to execute the transaction — the higher the default Gas Limit set by PancakeBunny to ensure execution under normal circumstances.
2.0. On the Bunny Distribution
Many of you may already be familiar with the Bunny Distribution, but it behooves us to review its components here in our discussion of why some users believe PancakeBunny “charges” higher fees than other protocols.
2.1. The Story So Far
First, most users who believe PancakeBunny “charges” higher fees do so because they see the high default GWEI and Gas Limit settings, but fail to consult BSCScan to confirm the actual fees they paid.
Another group of users believe that PancakeBunny charges higher fees because they notice that gas fees are indeed higher for our smarter smart contracts, but fail to realize that PancakeBunny does not receive any portion of these fees. The higher gas fees reflect the transactional complexity of our smarter strategies and drive our higher APYs. This is why the low gas fees on BSC are so important — they are what enables the construction of a greater number of connected transactions that would be too expensive on other blockchains.
Again, why do we have more complex strategies? To drive higher yields and to decrease transaction risk. The tradeoff is that in our smartest vaults, you should not consider transacting unless the amount you will transact is sufficiently higher than the cost to stake, unstake, or claim for you to benefit.
2.2. Enough About Transaction Fees — What About the PancakeBunny Bunny Distribution?
The third reason many users labor under the misperception that fees are higher on PancakeBunny is due to the Bunny Distribution, what is occasionally referred to as the “performance fee”. The Bunny Distribution is actually the portion of their returns that users receive in BUNNY tokens when they claim their returns. It also refers to the value that is reserved from PancakeBunny yields and allocated to the Bunny Pool for distribution among all BUNNY holders through the staking mechanism.
When we launched in December 2020, this Bunny Distribution was originally referred to as a 30% “performance fee”. Even now, when we are trying to explain the math behind transactions and the source of funds for the Bunny Pool, we occasionally refer to it as a “performance fee” because it makes certain aspects of the construct simpler to state and understand.
However, understanding the dual nature of the Bunny Distribution is central to understanding our tokenomics. It is NOT, in fact, a fee that is charged by the PancakeBunny protocol to the user. It is NOT a fee that goes to the Team. It is instead the amount of REAL value that backs the minting of each and every new BUNNY token, it is that portion (30%) of the value of their returns that users exchange for the BUNNY that has been minted. It should also be properly understood as the amount from each transaction that users share with the entire community.
3.0. Concluding Remarks
The purpose of this post has been to clarify some misconceptions about fees as they pertain to PancakeBunny.
1. PancakeBunny’s default GWEI and Gas Limit settings are higher than some other protocols. However, these are NOT the real gas fees that you will be charged by the BSC network. Check the real fees by clicking on the BSCScan link provided.
2. PancakeBunny’s smarter smart contracts and APY strategies do require more transactions, and consequently cost more gas, than typical strategies on simpler protocols. That is why the default settings are set higher than on some other protocols. But newcomers need to understand that again, these fees do not go to Team Bunny, they go to BSC.
3. There is no 30% “performance fee” per se. 30% of the value of your returns (the Bunny Distribution) is converted to new BUNNY at the time of claiming (at a current rate of 15 BUNNY per BNB). The Bunny Distribution is sent to the Bunny Pool, which operates as a farm of pooled Community Returns from which every user can farm proportional yields in WBNB
