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Arc’s fee market builds on EIP-1559 but replaces per-block base fee recalculation with an exponentially weighted moving average (EWMA) of block utilization. This smoothing mechanism ensures that short demand spikes do not propagate into sudden fee jumps, keeping transaction costs stable and easy to estimate. The base fee targets approximately $0.01 per transaction under normal conditions. For why Arc uses USDC as its gas token, see Stablecoin native model. For runtime parameters and RPC calls, see Gas and fees.

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How EWMA fee adjustment works

Standard EIP-1559 recalculates the base fee every block based on whether the previous block exceeded or fell short of a target gas utilization. This approach can produce sharp fee swings when a single block fills quickly. Arc replaces this per-block step function with an EWMA over a configurable smoothing window. Instead of reacting fully to one block’s utilization, the protocol blends recent utilization into a running average. The base fee then adjusts proportionally to the smoothed signal rather than the raw per-block value. 
utilization_ewma(n) = alpha * block_utilization(n) + (1 - alpha) * utilization_ewma(n - 1)

base_fee(n) = adjust(base_fee(n - 1), utilization_ewma(n), target_utilization)
# adjust() scales base_fee proportionally to (utilization_ewma / target_utilization),
# clamped to [minimum_base_fee, maximum_base_fee]
  • alpha controls how quickly the average responds to new data. A smaller alpha means more smoothing and slower reaction to spikes.
  • target_utilization is the equilibrium point the protocol steers toward. When the EWMA exceeds the target, the base fee rises; when it falls below, the base fee decreases.
The result is a fee curve that trends toward equilibrium gradually, making cost estimation straightforward even during bursts of activity.

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Key parameters

ParameterValueNotes
Base fee target~$0.01 per transactionDesign-time target under normal load
Testnet minimum base fee20 GweiTransactions below this threshold are rejected from the mempool
Maximum base fee1e-3 USDC per gas unitHard ceiling that bounds worst-case cost
Gas throughput20 M gas/secProtocol-level capacity limit
Smoothing methodEWMA of block utilizationReplaces EIP-1559 per-block recalculation
These parameters reflect the current testnet configuration and may be adjusted before mainnet launch. See Gas and fees for the latest runtime values.

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Priority fees

Like standard EIP-1559, Arc transactions include a priority fee (tip) in addition to the base fee. The tip incentivizes the sequencer to include a transaction promptly. Under normal network conditions, a minimal or zero tip is sufficient because the base fee alone covers inclusion. Set maxPriorityFeePerGas to 0 for most transactions. During periods of sustained congestion, a small tip can signal higher urgency. Query eth_maxPriorityFeePerGas on the Arc RPC for a recommended value.

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Why smoothing matters

Without smoothing, a single high-utilization block can double the base fee instantly, and a series of empty blocks can drop it just as fast. This volatility forces developers to build retry logic, fee-bumping heuristics, and complex estimation strategies. With EWMA smoothing:
  • Gradual adjustment. Fees move in small increments, so a short burst of transactions does not cause a sudden price shock.
  • Bounded range. The hard ceiling at 1e-3 USDC per gas unit ensures that even sustained congestion cannot push fees to extreme levels.
  • Simple estimation. You can call eth_gasPrice, eth_feeHistory, or eth_maxPriorityFeePerGas on the Arc RPC and trust that the returned values will remain accurate for a reasonable submission window.

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Developer benefits

Building on Arc’s stable fee design simplifies cost management and removes common integration challenges.

Predictable costs

Transaction fees target ~$0.01, and EWMA smoothing keeps them stable. You can quote costs to users with confidence.

Congestion resistant

Short-term demand spikes are absorbed by the smoothing window, so fees don’t surprise your users during traffic bursts.

Enterprise ready

Dollar-denominated, bounded fees mean transaction costs map directly to a known USDC amount. No post-hoc conversion is needed for cost tracking or reconciliation.

Flexible fee payment

Sponsor transactions on behalf of users through account abstraction or accept fees in multiple stablecoins without custom workarounds.