diff --git a/PENDING.md b/PENDING.md
index 545d74380d..9e3f1c1eb9 100644
--- a/PENDING.md
+++ b/PENDING.md
@@ -58,6 +58,8 @@ IMPROVEMENTS
   * [\#3418](https://github.com/cosmos/cosmos-sdk/issues/3418) Add vesting account
   genesis validation checks to `GaiaValidateGenesisState`.
   * [\#3420](https://github.com/cosmos/cosmos-sdk/issues/3420) Added maximum length to governance proposal descriptions and titles
+  * [\#3256](https://github.com/cosmos/cosmos-sdk/issues/3256) Add gas consumption
+  for tx size in the ante handler.
   * [\#3454](https://github.com/cosmos/cosmos-sdk/pull/3454) Add `--jail-whitelist` to `gaiad export` to enable testing of complex exports
   * [\#3424](https://github.com/cosmos/cosmos-sdk/issues/3424) Allow generation of gentxs with empty memo field.
 
diff --git a/baseapp/baseapp.go b/baseapp/baseapp.go
index ef5c692b9b..6a6cc79602 100644
--- a/baseapp/baseapp.go
+++ b/baseapp/baseapp.go
@@ -390,7 +390,7 @@ func handleQueryApp(app *BaseApp, path []string, req abci.RequestQuery) (res abc
 			if err != nil {
 				result = err.Result()
 			} else {
-				result = app.Simulate(tx)
+				result = app.Simulate(txBytes, tx)
 			}
 		case "version":
 			return abci.ResponseQuery{
@@ -718,7 +718,10 @@ func (app *BaseApp) runTx(mode runTxMode, txBytes []byte, tx sdk.Tx) (result sdk
 		if r := recover(); r != nil {
 			switch rType := r.(type) {
 			case sdk.ErrorOutOfGas:
-				log := fmt.Sprintf("out of gas in location: %v", rType.Descriptor)
+				log := fmt.Sprintf(
+					"out of gas in location: %v; gasWanted: %d, gasUsed: %d",
+					rType.Descriptor, gasWanted, ctx.GasMeter().GasConsumed(),
+				)
 				result = sdk.ErrOutOfGas(log).Result()
 			default:
 				log := fmt.Sprintf("recovered: %v\nstack:\n%v", r, string(debug.Stack()))
diff --git a/baseapp/baseapp_test.go b/baseapp/baseapp_test.go
index 82ee0bd9c3..3782491061 100644
--- a/baseapp/baseapp_test.go
+++ b/baseapp/baseapp_test.go
@@ -655,20 +655,20 @@ func TestSimulateTx(t *testing.T) {
 		app.BeginBlock(abci.RequestBeginBlock{})
 
 		tx := newTxCounter(count, count)
+		txBytes, err := cdc.MarshalBinaryLengthPrefixed(tx)
+		require.Nil(t, err)
 
 		// simulate a message, check gas reported
-		result := app.Simulate(tx)
+		result := app.Simulate(txBytes, tx)
 		require.True(t, result.IsOK(), result.Log)
 		require.Equal(t, gasConsumed, result.GasUsed)
 
 		// simulate again, same result
-		result = app.Simulate(tx)
+		result = app.Simulate(txBytes, tx)
 		require.True(t, result.IsOK(), result.Log)
 		require.Equal(t, gasConsumed, result.GasUsed)
 
 		// simulate by calling Query with encoded tx
-		txBytes, err := cdc.MarshalBinaryLengthPrefixed(tx)
-		require.Nil(t, err)
 		query := abci.RequestQuery{
 			Path: "/app/simulate",
 			Data: txBytes,
diff --git a/baseapp/helpers.go b/baseapp/helpers.go
index 0ac99887a3..fbc3df99d0 100644
--- a/baseapp/helpers.go
+++ b/baseapp/helpers.go
@@ -14,8 +14,8 @@ func (app *BaseApp) Check(tx sdk.Tx) (result sdk.Result) {
 }
 
 // nolint - full tx execution
-func (app *BaseApp) Simulate(tx sdk.Tx) (result sdk.Result) {
-	return app.runTx(runTxModeSimulate, nil, tx)
+func (app *BaseApp) Simulate(txBytes []byte, tx sdk.Tx) (result sdk.Result) {
+	return app.runTx(runTxModeSimulate, txBytes, tx)
 }
 
 // nolint
diff --git a/client/flags.go b/client/flags.go
index 31feacf6cd..c87a8933c5 100644
--- a/client/flags.go
+++ b/client/flags.go
@@ -11,9 +11,9 @@ import (
 
 // nolint
 const (
-	// DefaultGasAdjustment is applied to gas estimates to avoid tx
-	// execution failures due to state changes that might
-	// occur between the tx simulation and the actual run.
+	// DefaultGasAdjustment is applied to gas estimates to avoid tx execution
+	// failures due to state changes that might occur between the tx simulation
+	// and the actual run.
 	DefaultGasAdjustment = 1.0
 	DefaultGasLimit      = 200000
 	GasFlagAuto          = "auto"
diff --git a/client/lcd/lcd_test.go b/client/lcd/lcd_test.go
index c531a00404..c29eb64a7b 100644
--- a/client/lcd/lcd_test.go
+++ b/client/lcd/lcd_test.go
@@ -209,7 +209,9 @@ func TestCoinSend(t *testing.T) {
 	require.Equal(t, http.StatusInternalServerError, res.StatusCode, body)
 
 	// run simulation and test success with estimated gas
-	res, body, _ = doTransferWithGas(t, port, seed, name1, memo, pw, addr, "10000", 1.0, true, false, fees)
+	res, body, _ = doTransferWithGas(
+		t, port, seed, name1, memo, pw, addr, "10000", 1.0, true, false, fees,
+	)
 	require.Equal(t, http.StatusOK, res.StatusCode, body)
 
 	var gasEstResp rest.GasEstimateResponse
@@ -285,7 +287,9 @@ func TestCoinSendGenerateSignAndBroadcast(t *testing.T) {
 	acc := getAccount(t, port, addr)
 
 	// simulate tx
-	res, body, _ := doTransferWithGas(t, port, seed, name1, memo, "", addr, client.GasFlagAuto, 1, true, false, fees)
+	res, body, _ := doTransferWithGas(
+		t, port, seed, name1, memo, "", addr, client.GasFlagAuto, 1.0, true, false, fees,
+	)
 	require.Equal(t, http.StatusOK, res.StatusCode, body)
 
 	var gasEstResp rest.GasEstimateResponse
diff --git a/client/utils/utils.go b/client/utils/utils.go
index daad43156a..b5ae87eab6 100644
--- a/client/utils/utils.go
+++ b/client/utils/utils.go
@@ -19,6 +19,15 @@ import (
 	authtxb "github.com/cosmos/cosmos-sdk/x/auth/client/txbuilder"
 )
 
+// GasEstimateResponse defines a response definition for tx gas estimation.
+type GasEstimateResponse struct {
+	GasEstimate uint64 `json:"gas_estimate"`
+}
+
+func (gr GasEstimateResponse) String() string {
+	return fmt.Sprintf("gas estimate: %d", gr.GasEstimate)
+}
+
 // CompleteAndBroadcastTxCLI implements a utility function that facilitates
 // sending a series of messages in a signed transaction given a TxBuilder and a
 // QueryContext. It ensures that the account exists, has a proper number and
@@ -39,8 +48,11 @@ func CompleteAndBroadcastTxCLI(txBldr authtxb.TxBuilder, cliCtx context.CLIConte
 		if err != nil {
 			return err
 		}
-		fmt.Fprintf(os.Stderr, "estimated gas = %v\n", txBldr.GetGas())
+
+		gasEst := GasEstimateResponse{GasEstimate: txBldr.GetGas()}
+		fmt.Fprintf(os.Stderr, gasEst.String())
 	}
+
 	if cliCtx.Simulate {
 		return nil
 	}
diff --git a/cmd/gaia/app/sim_test.go b/cmd/gaia/app/sim_test.go
index dae525342a..f7d645a61b 100644
--- a/cmd/gaia/app/sim_test.go
+++ b/cmd/gaia/app/sim_test.go
@@ -79,7 +79,7 @@ func appStateFromGenesisFileFn(r *rand.Rand, accs []simulation.Account, genesisT
 		privKey := secp256k1.GenPrivKeySecp256k1(privkeySeed)
 		newAccs = append(newAccs, simulation.Account{privKey, privKey.PubKey(), acc.Address})
 	}
-	return json.RawMessage(genesis.AppState), newAccs, genesis.ChainID
+	return genesis.AppState, newAccs, genesis.ChainID
 }
 
 func appStateRandomizedFn(r *rand.Rand, accs []simulation.Account, genesisTimestamp time.Time) (json.RawMessage, []simulation.Account, string) {
@@ -138,11 +138,11 @@ func appStateRandomizedFn(r *rand.Rand, accs []simulation.Account, genesisTimest
 
 	authGenesis := auth.GenesisState{
 		Params: auth.Params{
-			MemoCostPerByte:        uint64(r.Intn(10) + 1),
-			MaxMemoCharacters:      uint64(r.Intn(200-100) + 100),
+			MaxMemoCharacters:      uint64(randIntBetween(r, 100, 200)),
 			TxSigLimit:             uint64(r.Intn(7) + 1),
-			SigVerifyCostED25519:   uint64(r.Intn(1000-500) + 500),
-			SigVerifyCostSecp256k1: uint64(r.Intn(1000-500) + 500),
+			TxSizeCostPerByte:      uint64(randIntBetween(r, 5, 15)),
+			SigVerifyCostED25519:   uint64(randIntBetween(r, 500, 1000)),
+			SigVerifyCostSecp256k1: uint64(randIntBetween(r, 500, 1000)),
 		},
 	}
 	fmt.Printf("Selected randomly generated auth parameters:\n\t%+v\n", authGenesis)
diff --git a/cmd/gaia/cli_test/cli_test.go b/cmd/gaia/cli_test/cli_test.go
index 6e2e60536c..0b6d5790df 100644
--- a/cmd/gaia/cli_test/cli_test.go
+++ b/cmd/gaia/cli_test/cli_test.go
@@ -279,7 +279,7 @@ func TestGaiaCLIGasAuto(t *testing.T) {
 	}{}
 	err := cdc.UnmarshalJSON([]byte(stdout), &sendResp)
 	require.Nil(t, err)
-	require.Equal(t, sendResp.Response.GasWanted, sendResp.Response.GasUsed)
+	require.True(t, sendResp.Response.GasWanted >= sendResp.Response.GasUsed)
 	tests.WaitForNextNBlocksTM(1, f.Port)
 
 	// Check state has changed accordingly
@@ -690,7 +690,7 @@ func TestGaiaCLISendGenerateSignAndBroadcast(t *testing.T) {
 
 	// Unmarshal the response and ensure that gas was properly used
 	require.Nil(t, app.MakeCodec().UnmarshalJSON([]byte(stdout), &result))
-	require.Equal(t, msg.Fee.Gas, uint64(result.Response.GasUsed))
+	require.True(t, msg.Fee.Gas >= uint64(result.Response.GasUsed))
 	require.Equal(t, msg.Fee.Gas, uint64(result.Response.GasWanted))
 	tests.WaitForNextNBlocksTM(1, f.Port)
 
diff --git a/docs/spec/auth/gas_fees.md b/docs/spec/auth/gas_fees.md
index fbe2103946..533ccb0025 100644
--- a/docs/spec/auth/gas_fees.md
+++ b/docs/spec/auth/gas_fees.md
@@ -7,9 +7,11 @@ 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.
-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:
+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:
 
 `gaiad start ... --minimum-gas-prices=0.00001steak,0.05photinos`
 
diff --git a/x/auth/ante.go b/x/auth/ante.go
index f82b7fc650..bc39f5323a 100644
--- a/x/auth/ante.go
+++ b/x/auth/ante.go
@@ -15,6 +15,17 @@ import (
 	sdk "github.com/cosmos/cosmos-sdk/types"
 )
 
+var (
+	// simulation signature values used to estimate gas consumption
+	simSecp256k1Pubkey secp256k1.PubKeySecp256k1
+	simSecp256k1Sig    [64]byte
+)
+
+func init() {
+	bz, _ := hex.DecodeString("035AD6810A47F073553FF30D2FCC7E0D3B1C0B74B61A1AAA2582344037151E143A")
+	copy(simSecp256k1Pubkey[:], bz)
+}
+
 // NewAnteHandler returns an AnteHandler that checks and increments sequence
 // numbers, checks signatures & account numbers, and deducts fees from the first
 // signer.
@@ -54,8 +65,12 @@ func NewAnteHandler(ak AccountKeeper, fck FeeCollectionKeeper) sdk.AnteHandler {
 			if r := recover(); r != nil {
 				switch rType := r.(type) {
 				case sdk.ErrorOutOfGas:
-					log := fmt.Sprintf("out of gas in location: %v", rType.Descriptor)
+					log := fmt.Sprintf(
+						"out of gas in location: %v; gasWanted: %d, gasUsed: %d",
+						rType.Descriptor, stdTx.Fee.Gas, newCtx.GasMeter().GasConsumed(),
+					)
 					res = sdk.ErrOutOfGas(log).Result()
+
 					res.GasWanted = stdTx.Fee.Gas
 					res.GasUsed = newCtx.GasMeter().GasConsumed()
 					abort = true
@@ -69,7 +84,9 @@ func NewAnteHandler(ak AccountKeeper, fck FeeCollectionKeeper) sdk.AnteHandler {
 			return newCtx, err.Result(), true
 		}
 
-		if res := ValidateMemo(newCtx.GasMeter(), stdTx, params); !res.IsOK() {
+		newCtx.GasMeter().ConsumeGas(params.TxSizeCostPerByte*sdk.Gas(len(newCtx.TxBytes())), "txSize")
+
+		if res := ValidateMemo(stdTx, params); !res.IsOK() {
 			return newCtx, res, true
 		}
 
@@ -131,9 +148,8 @@ func GetSignerAcc(ctx sdk.Context, ak AccountKeeper, addr sdk.AccAddress) (Accou
 	return nil, sdk.ErrUnknownAddress(addr.String()).Result()
 }
 
-// ValidateMemo validates the memo and if successful consumes gas for
-// verification.
-func ValidateMemo(gasMeter sdk.GasMeter, stdTx StdTx, params Params) sdk.Result {
+// ValidateMemo validates the memo size.
+func ValidateMemo(stdTx StdTx, params Params) sdk.Result {
 	memoLength := len(stdTx.GetMemo())
 	if uint64(memoLength) > params.MaxMemoCharacters {
 		return sdk.ErrMemoTooLarge(
@@ -144,7 +160,6 @@ func ValidateMemo(gasMeter sdk.GasMeter, stdTx StdTx, params Params) sdk.Result
 		).Result()
 	}
 
-	gasMeter.ConsumeGas(params.MemoCostPerByte*sdk.Gas(memoLength), "memo")
 	return sdk.Result{}
 }
 
@@ -164,7 +179,15 @@ func processSig(
 		return nil, sdk.ErrInternal("setting PubKey on signer's account").Result()
 	}
 
-	consumeSignatureVerificationGas(ctx.GasMeter(), sig.Signature, pubKey, params)
+	if simulate {
+		// Simulated txs should not contain a signature and are not required to
+		// contain a pubkey, so we must account for tx size of including a
+		// StdSignature (Amino encoding) and simulate gas consumption
+		// (assuming a SECP256k1 simulation key).
+		consumeSimSigGas(ctx.GasMeter(), pubKey, sig, params)
+	}
+
+	consumeSigVerificationGas(ctx.GasMeter(), sig.Signature, pubKey, params)
 	if !simulate && !pubKey.VerifyBytes(signBytes, sig.Signature) {
 		return nil, sdk.ErrUnauthorized("signature verification failed").Result()
 	}
@@ -178,11 +201,22 @@ func processSig(
 	return acc, res
 }
 
-var dummySecp256k1Pubkey secp256k1.PubKeySecp256k1
+func consumeSimSigGas(gasmeter sdk.GasMeter, pubkey crypto.PubKey, sig StdSignature, params Params) {
+	simSig := StdSignature{PubKey: pubkey}
+	if len(sig.Signature) == 0 {
+		simSig.Signature = simSecp256k1Sig[:]
+	}
 
-func init() {
-	bz, _ := hex.DecodeString("035AD6810A47F073553FF30D2FCC7E0D3B1C0B74B61A1AAA2582344037151E143A")
-	copy(dummySecp256k1Pubkey[:], bz)
+	sigBz := msgCdc.MustMarshalBinaryLengthPrefixed(simSig)
+	cost := sdk.Gas(len(sigBz) + 6)
+
+	// If the pubkey is a multi-signature pubkey, then we estimate for the maximum
+	// number of signers.
+	if _, ok := pubkey.(multisig.PubKeyMultisigThreshold); ok {
+		cost *= params.TxSigLimit
+	}
+
+	gasmeter.ConsumeGas(params.TxSizeCostPerByte*cost, "txSize")
 }
 
 // ProcessPubKey verifies that the given account address matches that of the
@@ -197,7 +231,7 @@ func ProcessPubKey(acc Account, sig StdSignature, simulate bool) (crypto.PubKey,
 		// shall consume the largest amount, i.e. it takes more gas to verify
 		// secp256k1 keys than ed25519 ones.
 		if pubKey == nil {
-			return dummySecp256k1Pubkey, sdk.Result{}
+			return simSecp256k1Pubkey, sdk.Result{}
 		}
 
 		return pubKey, sdk.Result{}
@@ -218,25 +252,27 @@ func ProcessPubKey(acc Account, sig StdSignature, simulate bool) (crypto.PubKey,
 	return pubKey, sdk.Result{}
 }
 
-// consumeSignatureVerificationGas consumes gas for signature verification based
-// upon the public key type. The cost is fetched from the given params and is
-// matched by the concrete type.
+// consumeSigVerificationGas consumes gas for signature verification based upon
+// the public key type. The cost is fetched from the given params and is matched
+// by the concrete type.
 //
 // TODO: Design a cleaner and flexible way to match concrete public key types.
-func consumeSignatureVerificationGas(meter sdk.GasMeter, sig []byte, pubkey crypto.PubKey, params Params) {
+func consumeSigVerificationGas(meter sdk.GasMeter, sig []byte, pubkey crypto.PubKey, params Params) {
 	pubkeyType := strings.ToLower(fmt.Sprintf("%T", pubkey))
 	switch {
 	case strings.Contains(pubkeyType, "ed25519"):
 		meter.ConsumeGas(params.SigVerifyCostED25519, "ante verify: ed25519")
+
 	case strings.Contains(pubkeyType, "secp256k1"):
 		meter.ConsumeGas(params.SigVerifyCostSecp256k1, "ante verify: secp256k1")
-	case strings.Contains(pubkeyType, "multisigthreshold"):
 
+	case strings.Contains(pubkeyType, "multisigthreshold"):
 		var multisignature multisig.Multisignature
 		codec.Cdc.MustUnmarshalBinaryBare(sig, &multisignature)
-		multisigPubKey := pubkey.(multisig.PubKeyMultisigThreshold)
 
+		multisigPubKey := pubkey.(multisig.PubKeyMultisigThreshold)
 		consumeMultisignatureVerificationGas(meter, multisignature, multisigPubKey, params)
+
 	default:
 		panic(fmt.Sprintf("unrecognized signature type: %s", pubkeyType))
 	}
@@ -250,7 +286,7 @@ func consumeMultisignatureVerificationGas(meter sdk.GasMeter,
 	sigIndex := 0
 	for i := 0; i < size; i++ {
 		if sig.BitArray.GetIndex(i) {
-			consumeSignatureVerificationGas(meter, sig.Sigs[sigIndex], pubkey.PubKeys[i], params)
+			consumeSigVerificationGas(meter, sig.Sigs[sigIndex], pubkey.PubKeys[i], params)
 			sigIndex++
 		}
 	}
@@ -294,8 +330,6 @@ func DeductFees(blockTime time.Time, acc Account, fee StdFee) (Account, sdk.Resu
 // enough fees to cover a proposer's minimum fees. An result object is returned
 // indicating success or failure.
 //
-// TODO: Account for transaction size.
-//
 // Contract: This should only be called during CheckTx as it cannot be part of
 // consensus.
 func EnsureSufficientMempoolFees(ctx sdk.Context, stdFee StdFee) sdk.Result {
diff --git a/x/auth/ante_test.go b/x/auth/ante_test.go
index bbe4f62fd6..21e9f50cde 100644
--- a/x/auth/ante_test.go
+++ b/x/auth/ante_test.go
@@ -595,9 +595,9 @@ func TestConsumeSignatureVerificationGas(t *testing.T) {
 	for _, tt := range tests {
 		t.Run(tt.name, func(t *testing.T) {
 			if tt.wantPanic {
-				require.Panics(t, func() { consumeSignatureVerificationGas(tt.args.meter, tt.args.sig, tt.args.pubkey, tt.args.params) })
+				require.Panics(t, func() { consumeSigVerificationGas(tt.args.meter, tt.args.sig, tt.args.pubkey, tt.args.params) })
 			} else {
-				consumeSignatureVerificationGas(tt.args.meter, tt.args.sig, tt.args.pubkey, tt.args.params)
+				consumeSigVerificationGas(tt.args.meter, tt.args.sig, tt.args.pubkey, tt.args.params)
 				require.Equal(t, tt.gasConsumed, tt.args.meter.GasConsumed(), fmt.Sprintf("%d != %d", tt.gasConsumed, tt.args.meter.GasConsumed()))
 			}
 		})
diff --git a/x/auth/genesis.go b/x/auth/genesis.go
index fa9fa2d82a..2836fd899c 100644
--- a/x/auth/genesis.go
+++ b/x/auth/genesis.go
@@ -54,8 +54,8 @@ func ValidateGenesis(data GenesisState) error {
 	if data.Params.MaxMemoCharacters == 0 {
 		return fmt.Errorf("invalid max memo characters: %d", data.Params.MaxMemoCharacters)
 	}
-	if data.Params.MemoCostPerByte == 0 {
-		return fmt.Errorf("invalid memo cost per byte: %d", data.Params.MemoCostPerByte)
+	if data.Params.TxSizeCostPerByte == 0 {
+		return fmt.Errorf("invalid tx size cost per byte: %d", data.Params.TxSizeCostPerByte)
 	}
 
 	return nil
diff --git a/x/auth/params.go b/x/auth/params.go
index 9fcde581cd..2831dbd32a 100644
--- a/x/auth/params.go
+++ b/x/auth/params.go
@@ -6,7 +6,6 @@ import (
 	"strings"
 
 	"github.com/cosmos/cosmos-sdk/codec"
-	sdk "github.com/cosmos/cosmos-sdk/types"
 	"github.com/cosmos/cosmos-sdk/x/params"
 )
 
@@ -15,18 +14,18 @@ const DefaultParamspace = "auth"
 
 // Default parameter values
 const (
-	DefaultMemoCostPerByte        sdk.Gas = 3
-	DefaultMaxMemoCharacters      uint64  = 256
-	DefaultTxSigLimit             uint64  = 7
-	DefaultSigVerifyCostED25519   uint64  = 590
-	DefaultSigVerifyCostSecp256k1 uint64  = 1000
+	DefaultMaxMemoCharacters      uint64 = 256
+	DefaultTxSigLimit             uint64 = 7
+	DefaultTxSizeCostPerByte      uint64 = 10
+	DefaultSigVerifyCostED25519   uint64 = 590
+	DefaultSigVerifyCostSecp256k1 uint64 = 1000
 )
 
 // Parameter keys
 var (
-	KeyMemoCostPerByte        = []byte("MemoCostPerByte")
 	KeyMaxMemoCharacters      = []byte("MaxMemoCharacters")
 	KeyTxSigLimit             = []byte("TxSigLimit")
+	KeyTxSizeCostPerByte      = []byte("TxSizeCostPerByte")
 	KeySigVerifyCostED25519   = []byte("SigVerifyCostED25519")
 	KeySigVerifyCostSecp256k1 = []byte("SigVerifyCostSecp256k1")
 )
@@ -35,9 +34,9 @@ var _ params.ParamSet = &Params{}
 
 // Params defines the parameters for the auth module.
 type Params struct {
-	MemoCostPerByte        sdk.Gas
 	MaxMemoCharacters      uint64
 	TxSigLimit             uint64 // max total number of signatures per tx
+	TxSizeCostPerByte      uint64
 	SigVerifyCostED25519   uint64
 	SigVerifyCostSecp256k1 uint64
 }
@@ -52,9 +51,9 @@ func ParamTypeTable() params.TypeTable {
 // nolint
 func (p *Params) KeyValuePairs() params.KeyValuePairs {
 	return params.KeyValuePairs{
-		{KeyMemoCostPerByte, &p.MemoCostPerByte},
 		{KeyMaxMemoCharacters, &p.MaxMemoCharacters},
 		{KeyTxSigLimit, &p.TxSigLimit},
+		{KeyTxSizeCostPerByte, &p.TxSizeCostPerByte},
 		{KeySigVerifyCostED25519, &p.SigVerifyCostED25519},
 		{KeySigVerifyCostSecp256k1, &p.SigVerifyCostSecp256k1},
 	}
@@ -70,9 +69,9 @@ func (p Params) Equal(p2 Params) bool {
 // DefaultParams returns a default set of parameters.
 func DefaultParams() Params {
 	return Params{
-		MemoCostPerByte:        DefaultMemoCostPerByte,
 		MaxMemoCharacters:      DefaultMaxMemoCharacters,
 		TxSigLimit:             DefaultTxSigLimit,
+		TxSizeCostPerByte:      DefaultTxSizeCostPerByte,
 		SigVerifyCostED25519:   DefaultSigVerifyCostED25519,
 		SigVerifyCostSecp256k1: DefaultSigVerifyCostSecp256k1,
 	}
@@ -83,9 +82,9 @@ func (p Params) String() string {
 	var sb strings.Builder
 
 	sb.WriteString("Params: \n")
-	sb.WriteString(fmt.Sprintf("MemoCostPerByte: %v\n", p.MemoCostPerByte))
 	sb.WriteString(fmt.Sprintf("MaxMemoCharacters: %d\n", p.MaxMemoCharacters))
 	sb.WriteString(fmt.Sprintf("TxSigLimit: %d\n", p.TxSigLimit))
+	sb.WriteString(fmt.Sprintf("TxSizeCostPerByte: %d\n", p.TxSizeCostPerByte))
 	sb.WriteString(fmt.Sprintf("SigVerifyCostED25519: %d\n", p.SigVerifyCostED25519))
 	sb.WriteString(fmt.Sprintf("SigVerifyCostSecp256k1: %d\n", p.SigVerifyCostSecp256k1))
 
diff --git a/x/bank/app_test.go b/x/bank/app_test.go
index a6e9d6dfef..f32d037810 100644
--- a/x/bank/app_test.go
+++ b/x/bank/app_test.go
@@ -141,7 +141,7 @@ func TestMsgSendWithAccounts(t *testing.T) {
 	}
 
 	for _, tc := range testCases {
-		mock.SignCheckDeliver(t, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
+		mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
 
 		for _, eb := range tc.expectedBalances {
 			mock.CheckBalance(t, mapp, eb.addr, eb.coins)
@@ -180,7 +180,7 @@ func TestMsgSendMultipleOut(t *testing.T) {
 	}
 
 	for _, tc := range testCases {
-		mock.SignCheckDeliver(t, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
+		mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
 
 		for _, eb := range tc.expectedBalances {
 			mock.CheckBalance(t, mapp, eb.addr, eb.coins)
@@ -224,7 +224,7 @@ func TestSengMsgMultipleInOut(t *testing.T) {
 	}
 
 	for _, tc := range testCases {
-		mock.SignCheckDeliver(t, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
+		mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
 
 		for _, eb := range tc.expectedBalances {
 			mock.CheckBalance(t, mapp, eb.addr, eb.coins)
@@ -269,7 +269,7 @@ func TestMsgSendDependent(t *testing.T) {
 	}
 
 	for _, tc := range testCases {
-		mock.SignCheckDeliver(t, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
+		mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, tc.msgs, tc.accNums, tc.accSeqs, tc.expSimPass, tc.expPass, tc.privKeys...)
 
 		for _, eb := range tc.expectedBalances {
 			mock.CheckBalance(t, mapp, eb.addr, eb.coins)
diff --git a/x/ibc/app_test.go b/x/ibc/app_test.go
index 8129783d44..6527c79ebd 100644
--- a/x/ibc/app_test.go
+++ b/x/ibc/app_test.go
@@ -72,10 +72,10 @@ func TestIBCMsgs(t *testing.T) {
 		Sequence:  0,
 	}
 
-	mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{transferMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
+	mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{transferMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
 	mock.CheckBalance(t, mapp, addr1, emptyCoins)
-	mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{transferMsg}, []uint64{0}, []uint64{1}, false, false, priv1)
-	mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{receiveMsg}, []uint64{0}, []uint64{2}, true, true, priv1)
+	mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{transferMsg}, []uint64{0}, []uint64{1}, false, false, priv1)
+	mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{receiveMsg}, []uint64{0}, []uint64{2}, true, true, priv1)
 	mock.CheckBalance(t, mapp, addr1, coins)
-	mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{receiveMsg}, []uint64{0}, []uint64{2}, false, false, priv1)
+	mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{receiveMsg}, []uint64{0}, []uint64{2}, false, false, priv1)
 }
diff --git a/x/mock/app.go b/x/mock/app.go
index 541d923dcd..902873ba1f 100644
--- a/x/mock/app.go
+++ b/x/mock/app.go
@@ -51,10 +51,7 @@ func NewApp() *App {
 	db := dbm.NewMemDB()
 
 	// Create the cdc with some standard codecs
-	cdc := codec.New()
-	sdk.RegisterCodec(cdc)
-	codec.RegisterCrypto(cdc)
-	auth.RegisterCodec(cdc)
+	cdc := createCodec()
 
 	// Create your application object
 	app := &App{
@@ -337,3 +334,11 @@ func incrementAllSequenceNumbers(initSeqNums []uint64) {
 		initSeqNums[i]++
 	}
 }
+
+func createCodec() *codec.Codec {
+	cdc := codec.New()
+	sdk.RegisterCodec(cdc)
+	codec.RegisterCrypto(cdc)
+	auth.RegisterCodec(cdc)
+	return cdc
+}
diff --git a/x/mock/app_test.go b/x/mock/app_test.go
index 098126d896..a101168381 100644
--- a/x/mock/app_test.go
+++ b/x/mock/app_test.go
@@ -61,14 +61,14 @@ func TestCheckAndDeliverGenTx(t *testing.T) {
 	require.Equal(t, accs[0], acct.(*auth.BaseAccount))
 
 	SignCheckDeliver(
-		t, mApp.BaseApp, []sdk.Msg{msg},
+		t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{msg},
 		[]uint64{accs[0].GetAccountNumber()}, []uint64{accs[0].GetSequence()},
 		true, true, privKeys[0],
 	)
 
 	// Signing a tx with the wrong privKey should result in an auth error
 	res := SignCheckDeliver(
-		t, mApp.BaseApp, []sdk.Msg{msg},
+		t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{msg},
 		[]uint64{accs[1].GetAccountNumber()}, []uint64{accs[1].GetSequence() + 1},
 		true, false, privKeys[1],
 	)
@@ -78,7 +78,7 @@ func TestCheckAndDeliverGenTx(t *testing.T) {
 
 	// Resigning the tx with the correct privKey should result in an OK result
 	SignCheckDeliver(
-		t, mApp.BaseApp, []sdk.Msg{msg},
+		t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{msg},
 		[]uint64{accs[0].GetAccountNumber()}, []uint64{accs[0].GetSequence() + 1},
 		true, true, privKeys[0],
 	)
diff --git a/x/mock/test_utils.go b/x/mock/test_utils.go
index 9c24967aba..f2af216e13 100644
--- a/x/mock/test_utils.go
+++ b/x/mock/test_utils.go
@@ -5,6 +5,8 @@ import (
 	"math/rand"
 	"testing"
 
+	"github.com/cosmos/cosmos-sdk/codec"
+
 	"github.com/stretchr/testify/require"
 	abci "github.com/tendermint/tendermint/abci/types"
 	"github.com/tendermint/tendermint/crypto"
@@ -71,12 +73,16 @@ func CheckGenTx(
 // the parameter 'expPass' against the result. A corresponding result is
 // returned.
 func SignCheckDeliver(
-	t *testing.T, app *baseapp.BaseApp, msgs []sdk.Msg, accNums []uint64,
-	seq []uint64, expSimPass, expPass bool, priv ...crypto.PrivKey,
+	t *testing.T, cdc *codec.Codec, app *baseapp.BaseApp, msgs []sdk.Msg,
+	accNums []uint64, seq []uint64, expSimPass, expPass bool, priv ...crypto.PrivKey,
 ) sdk.Result {
 	tx := GenTx(msgs, accNums, seq, priv...)
+
+	txBytes, err := cdc.MarshalBinaryLengthPrefixed(tx)
+	require.Nil(t, err)
+
 	// Must simulate now as CheckTx doesn't run Msgs anymore
-	res := app.Simulate(tx)
+	res := app.Simulate(txBytes, tx)
 
 	if expSimPass {
 		require.Equal(t, sdk.CodeOK, res.Code, res.Log)
diff --git a/x/slashing/app_test.go b/x/slashing/app_test.go
index e9c17b89a5..20e5380809 100644
--- a/x/slashing/app_test.go
+++ b/x/slashing/app_test.go
@@ -26,6 +26,8 @@ func getMockApp(t *testing.T) (*mock.App, staking.Keeper, Keeper) {
 	mapp := mock.NewApp()
 
 	RegisterCodec(mapp.Cdc)
+	stakingTypes.RegisterCodec(mapp.Cdc)
+
 	keyStaking := sdk.NewKVStoreKey(staking.StoreKey)
 	tkeyStaking := sdk.NewTransientStoreKey(staking.TStoreKey)
 	keySlashing := sdk.NewKVStoreKey(StoreKey)
@@ -107,7 +109,7 @@ func TestSlashingMsgs(t *testing.T) {
 	createValidatorMsg := staking.NewMsgCreateValidator(
 		sdk.ValAddress(addr1), priv1.PubKey(), bondCoin, description, commission,
 	)
-	mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{createValidatorMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
+	mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{createValidatorMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
 	mock.CheckBalance(t, mapp, addr1, sdk.Coins{genCoin.Minus(bondCoin)})
 	mapp.BeginBlock(abci.RequestBeginBlock{})
 
@@ -121,7 +123,7 @@ func TestSlashingMsgs(t *testing.T) {
 	checkValidatorSigningInfo(t, mapp, keeper, sdk.ConsAddress(addr1), false)
 
 	// unjail should fail with unknown validator
-	res := mock.SignCheckDeliver(t, mapp.BaseApp, []sdk.Msg{unjailMsg}, []uint64{0}, []uint64{1}, false, false, priv1)
+	res := mock.SignCheckDeliver(t, mapp.Cdc, mapp.BaseApp, []sdk.Msg{unjailMsg}, []uint64{0}, []uint64{1}, false, false, priv1)
 	require.EqualValues(t, CodeValidatorNotJailed, res.Code)
 	require.EqualValues(t, DefaultCodespace, res.Codespace)
 }
diff --git a/x/staking/app_test.go b/x/staking/app_test.go
index 852a9593ab..c7203c6e7f 100644
--- a/x/staking/app_test.go
+++ b/x/staking/app_test.go
@@ -120,7 +120,7 @@ func TestStakingMsgs(t *testing.T) {
 		sdk.ValAddress(addr1), priv1.PubKey(), bondCoin, description, commissionMsg,
 	)
 
-	mock.SignCheckDeliver(t, mApp.BaseApp, []sdk.Msg{createValidatorMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
+	mock.SignCheckDeliver(t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{createValidatorMsg}, []uint64{0}, []uint64{0}, true, true, priv1)
 	mock.CheckBalance(t, mApp, addr1, sdk.Coins{genCoin.Minus(bondCoin)})
 	mApp.BeginBlock(abci.RequestBeginBlock{})
 
@@ -134,7 +134,7 @@ func TestStakingMsgs(t *testing.T) {
 		addr1, sdk.ValAddress(addr2), priv2.PubKey(), bondCoin, description, commissionMsg,
 	)
 
-	mock.SignCheckDeliver(t, mApp.BaseApp, []sdk.Msg{createValidatorMsgOnBehalfOf}, []uint64{0, 0}, []uint64{1, 0}, true, true, priv1, priv2)
+	mock.SignCheckDeliver(t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{createValidatorMsgOnBehalfOf}, []uint64{0, 0}, []uint64{1, 0}, true, true, priv1, priv2)
 	mock.CheckBalance(t, mApp, addr1, sdk.Coins{genCoin.Minus(bondCoin).Minus(bondCoin)})
 	mApp.BeginBlock(abci.RequestBeginBlock{})
 
@@ -150,7 +150,7 @@ func TestStakingMsgs(t *testing.T) {
 	description = NewDescription("bar_moniker", "", "", "")
 	editValidatorMsg := NewMsgEditValidator(sdk.ValAddress(addr1), description, nil)
 
-	mock.SignCheckDeliver(t, mApp.BaseApp, []sdk.Msg{editValidatorMsg}, []uint64{0}, []uint64{2}, true, true, priv1)
+	mock.SignCheckDeliver(t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{editValidatorMsg}, []uint64{0}, []uint64{2}, true, true, priv1)
 	validator = checkValidator(t, mApp, keeper, sdk.ValAddress(addr1), true)
 	require.Equal(t, description, validator.Description)
 
@@ -158,13 +158,13 @@ func TestStakingMsgs(t *testing.T) {
 	mock.CheckBalance(t, mApp, addr2, sdk.Coins{genCoin})
 	delegateMsg := NewMsgDelegate(addr2, sdk.ValAddress(addr1), bondCoin)
 
-	mock.SignCheckDeliver(t, mApp.BaseApp, []sdk.Msg{delegateMsg}, []uint64{0}, []uint64{1}, true, true, priv2)
+	mock.SignCheckDeliver(t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{delegateMsg}, []uint64{0}, []uint64{1}, true, true, priv2)
 	mock.CheckBalance(t, mApp, addr2, sdk.Coins{genCoin.Minus(bondCoin)})
 	checkDelegation(t, mApp, keeper, addr2, sdk.ValAddress(addr1), true, sdk.NewDec(10))
 
 	// begin unbonding
 	beginUnbondingMsg := NewMsgUndelegate(addr2, sdk.ValAddress(addr1), sdk.NewDec(10))
-	mock.SignCheckDeliver(t, mApp.BaseApp, []sdk.Msg{beginUnbondingMsg}, []uint64{0}, []uint64{2}, true, true, priv2)
+	mock.SignCheckDeliver(t, mApp.Cdc, mApp.BaseApp, []sdk.Msg{beginUnbondingMsg}, []uint64{0}, []uint64{2}, true, true, priv2)
 
 	// delegation should exist anymore
 	checkDelegation(t, mApp, keeper, addr2, sdk.ValAddress(addr1), false, sdk.Dec{})