Network fees cover the cost of executing & committing transactions to the various blockchains.
On the Ethereum blockchain, there is an additional concept known as the "Gas Price" of a transaction when calculating network fees. This Gas Price is typically measured in gwei (10e-9 or 0.000000001 ETH). While it's possible to offer any price, the amount actually required to get your transaction processed in a timely manner is dependent on Ethereum network traffic conditions. If too low a price is offered, the transaction may not be mined and will not be included in the blockchain. If too high a price is offered, execution will be fast, but it consumes your ETH unnecessarily.
Since our users highly value speed and reliability of transaction execution, Switcheo uses an algorithm which ensures that trade transactions on Switcheo get mined and confirmed quickly. This then allows for quicker withdrawals when they are made shortly after trading (settlement time). The Gas price used is primarily based on the “Fast” value from https://ethgasstation.info:
If the calculated fee is determined to be too low after broadcasting, Switcheo does a "Replace-By-Fee" transaction, which accelerates trade settlement by incentivizing miners to include Switcheo trade transactions in the next block to be mined.
The final network fee is calculated by multiplying the Gas Price obtained above by the number of Gas needed to execute the Exchange Smart Contract. Trades typically consume about 200k Gas, depending on how the trade is matched.
For example, if the “Fast” value is 10 GWEI, and the transaction uses 274,000 Gas to execute, then the network cost would be (274,000 * (10 * 0.000000001)) ETH = 0.00274 ETH.
The user is charged the Network Fee if it is greater than 10% of the Trading Fee.
If the Network Fee is less than 10% of the Trading Fee, the Network Fee is waived.
To make the network fee calculation simpler for our users, we display the final estimated network fee amount at the bottom of the exchange window.
A full list of Network Fees can be found here.
To find out more information about Ethereum's transaction cost calculations: https://github.com/ethereum/wiki/wiki/Glossary