Understanding Priority Fees on Solana

Solana's priority fee system allows users to pay extra to have their transactions processed faster, especially during network congestion. Understanding when and how to use priority fees can save you money while ensuring your important transactions go through.

How Priority Fees Work

Validators on Solana process transactions based on a fee-priority queue. When you add a priority fee, your transaction moves ahead of those with lower or no priority fees.

The Fee Structure

• 🔹 Base Fee: ~0.000005 SOL per signature (mandatory)
• 🔹 Priority Fee: Variable, measured in microlamports per compute unit (optional)
• 🔹 Compute Budget: The amount of computational resources your transaction uses

When to Use Priority Fees

High Priority Situations

• 🔹 During network congestion - Major token launches or NFT mints can spike network activity
• 🔹 Time-sensitive transactions - DeFi arbitrage or liquidation protection
• 🔹 High-value transfers - When speed matters more than cost
• 🔹 NFT minting competition - Popular drops with limited supply
• 🔹 Token launches - First-come-first-served situations

Low/No Priority Situations

• 🔹 Standard token transfers with no urgency
• 🔹 Off-peak hours with low network activity
• 🔹 Staking operations that can wait
• 🔹 Closing empty token accounts

How to Set Priority Fees

In Phantom Wallet

1. Go to Settings → Transaction Preferences
2. Choose from preset levels (Low, Medium, High, Turbo)
3. Or set a custom priority fee amount

In Solflare

1. Open Settings → Network
2. Adjust the "Priority Fee" slider
3. Save your preferences

Programmatically

Developers can set priority fees using the ComputeBudgetProgram:

const modifyComputeUnits = ComputeBudgetProgram.setComputeUnitPrice({
  microLamports: 1000, // Priority fee in microlamports per compute unit
});

Understanding Compute Units

Compute units represent the computational work required for a transaction:

The total priority fee = (Compute Units) × (Price per Compute Unit)

Monitoring Priority Fee Levels

Check current recommended priority fees:

• 🔹 Triton One Priority Fee API
• 🔹 Wallet built-in estimators
• 🔹 DeFi protocol suggestions (Jupiter, Raydium show estimates)

Common Mistakes to Avoid

Overpaying During Normal Conditions

Many wallets default to medium or high priority. During normal network conditions, you're essentially paying extra for no benefit.

Underpaying During Critical Moments

Conversely, not using priority fees during an NFT mint or token launch often means your transaction fails while others succeed.

Ignoring Failed Transactions

Failed transactions still cost the base fee. If you're getting failures, adding a priority fee might actually save money by reducing retries.

Best Practices

1. Check network status before transacting - Is congestion actually high?
2. Start low and increase if needed - You can retry with higher priority
3. Use wallet presets wisely - Understand what each level costs
4. Monitor your transaction history - Track how much you're spending on fees

Use priority fees strategically to avoid overspending while ensuring your important transactions go through!