Fees serve two purposes for an operator of the network.
Fees limit the growth of the state stored by every full node and allow for general purpose censorship of transactions of little economic value. Fees are best suited as an anti-spam mechanism where validators are disinterested in the use of the network and identities of users.
Fees are determined by the gas limits and gas prices transactions provide, where
fees = ceil(gasLimit * gasPrices). Txs incur gas costs for all state reads/writes,
signature verification, as well as costs proportional to the tx size. Operators
should set minimum gas prices when starting their nodes. They must set the unit
costs of gas in each token denomination they wish to support:
simd start ... --minimum-gas-prices=0.00001stake;0.05photinos
When adding transactions to mempool or gossipping transactions, validators check if the transaction's gas prices, which are determined by the provided fees, meet any of the validator's minimum gas prices. In other words, a transaction must provide a fee of at least one denomination that matches a validator's minimum gas price.
Tendermint does not currently provide fee based mempool prioritization, and fee based mempool filtering is local to node and not part of consensus. But with minimum gas prices set, such a mechanism could be implemented by node operators.
Because the market value for tokens will fluctuate, validators are expected to dynamically adjust their minimum gas prices to a level that would encourage the use of the network.