Relay Fee

A relay fee is a payment made to a network intermediary, known as a relayer, for the service of forwarding a user's transaction to a blockchain's mempool. This fee is separate from the standard transaction fee (or gas fee) paid to miners or validators for block inclusion and execution. Relayers operate as infrastructure nodes that accept, propagate, and sometimes bundle transactions, acting as a critical bridge between users and the decentralized network, especially in systems where direct submission is costly or complex.

This mechanism is most prominent in networks like Ethereum, where MEV (Maximal Extractable Value) searchers and block builders often act as relayers. A user or a dapp might pay a relay fee to ensure their transaction is included in a bundle sent to a trusted builder, improving its chances of timely and successful execution. The relay fee compensates the relayer for their operational costs, network connectivity, and the value of their order flow, but does not guarantee the transaction will be included in a block—that depends on the subsequent miner/validator fee.

The need for relay fees arises in advanced transaction routing strategies. For example, to avoid frontrunning or to execute complex DeFi arbitrage, traders submit transactions through private relay networks. These relays offer services like transaction privacy, ordering, and speed, for which they charge a fee. The ecosystem of relays, builders, and proposers forms a critical part of the MEV supply chain, with relay fees representing one layer of the total cost for sophisticated blockchain interaction.

It's crucial to distinguish a relay fee from a priority fee (tip). A priority fee is an extra incentive added on top of the base fee to encourage a validator to prioritize a transaction within a block. A relay fee, conversely, is paid before the transaction reaches the validator, for the service of propagation and potential bundling. Both can be paid in the same transaction, but they serve different actors in the pipeline.

The structure and prevalence of relay fees are evolving with blockchain scaling solutions. In Layer 2 rollups and other altchains, similar relay mechanisms exist for cross-chain messaging or batch submission. As the blockchain stack becomes more modular, with distinct roles for execution, settlement, and data availability, relay fees may become a standard cost component for ensuring reliable and efficient transaction delivery across various network layers.

A relay fee is a payment made to a network intermediary, known as a relayer, for the service of forwarding a user's transaction to a blockchain's mempool. This is distinct from the standard gas fee or transaction fee paid to network validators. The relay fee compensates the relayer for its operational costs, which include monitoring the network, bundling transactions, and broadcasting them efficiently. This model is particularly critical in networks where users cannot directly submit transactions, such as in certain Layer 2 rollups or cross-chain bridges, or when users wish to pay fees in a token other than the network's native currency.

The workflow typically involves a user signing a transaction and sending it to a relayer's off-chain service. The relayer then pays the required network gas fee in the blockchain's native token (e.g., ETH on Ethereum) on the user's behalf. In return, the user pays the relayer a fee, which can be denominated in any agreed-upon asset, often via a meta-transaction. This enables gasless transactions for end-users and abstracts away the complexity of managing native tokens. Key protocols utilizing this pattern include Gas Station Network (GSN) for Ethereum dApps and various account abstraction implementations.

Relay fees are crucial for improving user experience and network accessibility. They allow applications to sponsor transaction costs for their users or let users pay with ERC-20 tokens. The fee amount is usually determined by a competitive marketplace; relayers set prices based on current network congestion, their own operational margins, and the perceived risk of the transaction. This system creates a vital piece of blockchain infrastructure, decoupling the entity that signs a transaction from the entity that funds its execution, thereby enabling broader adoption and more flexible economic models.

A relay fee is the compensation paid by a bundler to a relay for the service of forwarding and submitting a bundle of UserOperations to the blockchain. In the EIP-4337 (Account Abstraction) architecture, relays are optional network nodes that act as intermediaries, allowing bundlers to outsource the tasks of transaction propagation and on-chain submission. This fee compensates the relay for its operational costs, including gas expenditure and infrastructure overhead, and is distinct from the user's payment to the bundler for inclusion.

The relay fee mechanism is crucial for network scalability and decentralization. By separating the roles of bundling (aggregating operations) and relaying (broadcasting transactions), the system allows specialized actors to optimize for specific tasks. A bundler may choose to run its own relay to capture the full fee, or it may pay an external relay for its superior network connectivity and reliability. This creates a competitive market for relay services, where fees are typically negotiated off-chain and can be influenced by network congestion and the urgency of the transaction bundle.

Technically, the relay fee is not a direct on-chain payment but is embedded within the economic logic of the bundle. The bundler includes the relay's fee as part of its total cost calculation when constructing the bundle's transaction. The bundler's profit is the difference between the total fees collected from users (in ERC-20 tokens or the chain's native currency) and the sum of the gas costs for on-chain execution plus the relay fee. This structure ensures all participants are economically incentivized to keep the system running efficiently.