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<title>RFC-0146: Deflationary Transaction Fee Model for the Relay Chain and its System Parachains - Polkadot Fellowship RFCs</title>
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<ol class="chapter"><li class="chapter-item expanded affix "><a href="../introduction.html">Introduction</a></li><li class="spacer"></li><li class="chapter-item expanded affix "><li class="part-title">Newly Proposed</li><li class="spacer"></li><li class="chapter-item expanded affix "><li class="part-title">Proposed</li><li class="chapter-item expanded "><a href="../proposed/0000-pre-elves_soft.html">RFC-0000: Pre-ELVES soft concensus</a></li><li class="chapter-item expanded "><a href="../proposed/0000-rewards.html">RFC-0000: Validator Rewards</a></li><li class="chapter-item expanded "><a href="../proposed/0004-remove-unnecessary-allocator-usage.html">RFC-0004: Remove the host-side runtime memory allocator</a></li><li class="chapter-item expanded "><a href="../proposed/0006-dynamic-pricing-for-bulk-coretime-sales.html">RFC-0006: Dynamic Pricing for Bulk Coretime Sales</a></li><li class="chapter-item expanded "><a href="../proposed/0034-xcm-absolute-location-account-derivation.html">RFC-34: XCM Absolute Location Account Derivation</a></li><li class="chapter-item expanded "><a href="../proposed/0035-conviction-voting-delegation-modifications.html"> RFC-0035: Conviction Voting Delegation Modifications</a></li><li class="chapter-item expanded "><a href="../proposed/0044-rent-based-registration.html">RFC-0044: Rent based registration model</a></li><li class="chapter-item expanded "><a href="../proposed/0054-remove-heap-pages.html">RFC-0054: Remove the concept of "heap pages" from the client</a></li><li class="chapter-item expanded "><a href="../proposed/0070-x-track-kusamanetwork.html">RFC-0070: X Track for @kusamanetwork</a></li><li class="chapter-item expanded "><a href="../proposed/0073-referedum-deposit-track.html">RFC-0073: Decision Deposit Referendum Track</a></li><li class="chapter-item expanded "><a href="../proposed/0074-stateful-multisig-pallet.html">RFC-0074: Stateful Multisig Pallet</a></li><li class="chapter-item expanded "><a href="../proposed/0077-increase-max-length-of-identity-pgp-fingerprint-value.html">RFC-0077: Increase maximum length of identity PGP fingerprint values from 20 bytes</a></li><li class="chapter-item expanded "><a href="../proposed/0088-broker-pallet-slashable-deposit-purchaser-reputation-reserved-cores.html">RFC-0088: Add slashable locked deposit, purchaser reputation, and reserved cores for on-chain identities to broker pallet</a></li><li class="chapter-item expanded "><a href="../proposed/00xx-secondary-marketplace-for-regions.html">RFC-0001: Secondary Market for Regions</a></li><li class="chapter-item expanded "><a href="../proposed/00xx-smart-contracts-coretime-chain.html">RFC-0002: Smart Contracts on the Coretime Chain</a></li><li class="chapter-item expanded "><a href="../proposed/0102-offchain-parachain-runtime-upgrades.html">RFC-0000: Feature Name Here</a></li><li class="chapter-item expanded "><a href="../proposed/0106-xcm-remove-fees-mode.html">RFC-0106: Remove XCM fees mode</a></li><li class="chapter-item expanded "><a href="../proposed/0111-pure-proxy-replication.html">RFC-0111: Pure Proxy Replication</a></li><li class="chapter-item expanded "><a href="../proposed/0112-compress-state-response-message-in-state-sync.html">RFC-0112: Compress the State Response Message in State Sync</a></li><li class="chapter-item expanded "><a href="../proposed/0114-secp256r1-hostfunction.html">RFC-0114: Introduce secp256r1_ecdsa_verify_prehashed Host Function to verify NIST-P256 elliptic curve signatures</a></li><li class="chapter-item expanded "><a href="../proposed/0117-unbrick-collective.html">RFC-0117: The Unbrick Collective</a></li><li class="chapter-item expanded "><a href="../proposed/0120-referenda-confirmation-by-candle-mechanism.html">RFC-0120: Referenda Confirmation by Candle Mechanism</a></li><li class="chapter-item expanded "><a href="../proposed/0124-extrinsic-version-5.html">RFC-0124: Extrinsic version 5</a></li><li class="chapter-item expanded "><a href="../proposed/0138-invulnerable-collator-election.html">RFC-0138: Election mechanism for invulnerable collators on system chains</a></li><li class="chapter-item expanded "><a href="../proposed/0145-remove-unnecessary-allocator-usage.html">RFC-0145: Remove the host-side runtime memory allocator</a></li><li class="chapter-item expanded "><a href="../proposed/0150-voting-while-delegating.html">RFC-150: Allow Voting While Delegating</a></li><li class="chapter-item expanded "><a href="../proposed/0152-decentralized-convex-preference-coretime-market-for-polkadot.html">RFC-0152: Decentralized Convex-Preference Coretime Market for Polkadot</a></li><li class="chapter-item expanded "><a href="../proposed/0154-multi-slot-aura.html">RFC-0154: AURA Multi-Slot Collation </a></li><li class="chapter-item expanded "><a href="../proposed/0155-pUSD.html">RFC-0155: pUSD (Polkadot USD over-collateralised debt token)</a></li><li class="chapter-item expanded "><a href="../proposed/RFC-114 Adjust Tipper Track Confirmation Periods.html">RFC-114: Adjust Tipper Track Confirmation Periods</a></li><li class="chapter-item expanded "><a href="../proposed/TODO-stale-nomination-reward-curve.html">RFC-TODO: Stale Nomination Reward Curve</a></li><li class="chapter-item expanded "><a href="../proposed/xxxx-improve-the-security-of-proof-of-possession.html">RFC-XXXX: Adding customized mandatory context to proof of possession statement</a></li><li class="spacer"></li><li class="chapter-item expanded affix "><li class="part-title">Approved</li><li class="chapter-item expanded "><a href="../approved/0001-agile-coretime.html">RFC-1: Agile Coretime</a></li><li class="chapter-item expanded "><a href="../approved/0005-coretime-interface.html">RFC-5: Coretime Interface</a></li><li class="chapter-item expanded "><a href="../approved/0007-system-collator-selection.html">RFC-0007: System Collator Selection</a></li><li class="chapter-item expanded "><a href="../approved/0008-parachain-bootnodes-dht.html">RFC-0008: Store parachain bootnodes in relay chain DHT</a></li><li class="chapter-item expanded "><a href="../approved/0009-improved-net-light-client-requests.html">RFC-0009: Improved light client requests networking protocol</a></li><li class="chapter-item expanded "><a href="../approved/0010-burn-coretime-revenue.html">RFC-0010: Burn Coretime Revenue</a></li><li class="chapter-item expanded "><a href="../approved/0012-process-for-adding-new-collectives.html">RFC-0012: Process for Adding New System Collectives</a></li><li class="chapter-item expanded "><a href="../approved/0013-prepare-blockbuilder-and-core-runtime-apis-for-mbms.html">RFC-0013: Prepare Core runtime API for MBMs</a></li><li class="chapter-item expanded "><a href="../approved/0014-improve-locking-mechanism-for-parachains.html">RFC-0014: Improve locking mechanism for parachains</a></li><li class="chapter-item expanded "><a href="../approved/0017-coretime-market-redesign.html">RFC-0017: Coretime Market Redesign</a></li><li class="chapter-item expanded "><a href="../approved/0022-adopt-encointer-runtime.html">RFC-0022: Adopt Encointer Runtime</a></li><li class="chapter-item expanded "><a href="../approved/0026-sassafras-consensus.html">RFC-0026: Sassafras Consensus Protocol</a></li><li class="chapter-item expanded "><a href="../approved/0032-minimal-relay.html">RFC-0032: Minimal Relay</a></li><li class="chapter-item expanded "><a href="../approved/0042-extrinsics-state-version.html">RFC-0042: Add System version that replaces StateVersion on RuntimeVersion</a></li><li class="chapter-item expanded "><a href="../approved/0043-storage-proof-size-hostfunction.html">RFC-0043: Introduce storage_proof_size Host Function for Improved Parachain Block Utilization</a></li><li class="chapter-item expanded "><a href="../approved/0045-nft-deposits-asset-hub.html">RFC-0045: Lowering NFT Deposits on Asset Hub</a></li><li class="chapter-item expanded "><a href="../approved/0047-assignment-of-availability-chunks.html">RFC-0047: Assignment of availability chunks to validators</a></li><li class="chapter-item expanded "><a href="../approved/0048-session-keys-runtime-api.html">RFC-0048: Generate ownership proof for SessionKeys</a></li><li class="chapter-item expanded "><a href="../approved/0050-fellowship-salaries.html">RFC-0050: Fellowship Salaries</a></li><li class="chapter-item expanded "><a href="../approved/0056-one-transaction-per-notification.html">RFC-0056: Enforce only one transaction per notification</a></li><li class="chapter-item expanded "><a href="../approved/0059-nodes-capabilities-discovery.html">RFC-0059: Add a discovery mechanism for nodes based on their capabilities</a></li><li class="chapter-item expanded "><a href="../approved/0078-merkleized-metadata.html">RFC-0078: Merkleized Metadata</a></li><li class="chapter-item expanded "><a href="../approved/0084-general-transaction-extrinsic-format.html">RFC-0084: General transactions in extrinsic format</a></li><li class="chapter-item expanded "><a href="../approved/0091-dht-record-creation-time.html">RFC-0091: DHT Authority discovery record creation time</a></li><li class="chapter-item expanded "><a href="../approved/0097-unbonding_queue.html">RFC-0097: Unbonding Queue</a></li><li class="chapter-item expanded "><a href="../approved/0099-transaction-extension-version.html">RFC-0099: Introduce a transaction extension version</a></li><li class="chapter-item expanded "><a href="../approved/0100-xcm-multi-type-asset-transfer.html">RFC-0100: New XCM instruction: InitiateAssetsTransfer</a></li><li class="chapter-item expanded "><a href="../approved/0101-xcm-transact-remove-max-weight-param.html">RFC-0101: XCM Transact remove require_weight_at_most parameter</a></li><li class="chapter-item expanded "><a href="../approved/0103-introduce-core-index-commitment.html">RFC-0103: Introduce a CoreIndex commitment and a SessionIndex field in candidate receipts</a></li><li class="chapter-item expanded "><a href="../approved/0105-xcm-improved-fee-mechanism.html">RFC-0105: XCM improved fee mechanism</a></li><li class="chapter-item expanded "><a href="../approved/0107-xcm-execution-hints.html">RFC-0107: XCM Execution hints</a></li><li class="chapter-item expanded "><a href="../approved/0108-xcm-remove-testnet-ids.html">RFC-0108: Remove XCM testnet NetworkIds</a></li><li class="chapter-item expanded "><a href="../approved/0122-alias-origin-on-asset-transfers.html">RFC-0122: Asset transfers can alias XCM origin on destination to original origin</a></li><li class="chapter-item expanded "><a href="../approved/0123-pending-code-as-storage-location-for-runtime-upgrades.html">RFC-0123: Introduce :pending_code as intermediate storage key for the runtime code</a></li><li class="chapter-item expanded "><a href="../approved/0125-xcm-asset-metadata.html">RFC-0125: XCM Asset Metadata</a></li><li class="chapter-item expanded "><a href="../approved/0126-introduce-pvq.html">RFC-0126: Introduce PVQ (PolkaVM Query)</a></li><li class="chapter-item expanded "><a href="../approved/0135-compressed-blob-prefixes.html">RFC-0135: Compressed Blob Prefixes</a></li><li class="chapter-item expanded "><a href="../approved/0139-faster-erasure-coding.html">RFC-0139: Faster Erasure Coding</a></li><li class="chapter-item expanded "><a href="../approved/0146-deflationary-fee-proposal.html" class="active">RFC-0146: Deflationary Transaction Fee Model for the Relay Chain and its System Parachains</a></li><li class="chapter-item expanded "><a href="../approved/0149-rfc-1-renewal-adjustment.html">RFC-0149: Renewal Adjustment</a></li><li class="spacer"></li><li class="chapter-item expanded affix "><li class="part-title">Stale</li></ol>
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<p><a href="https://github.com/polkadot-fellows/RFCs/blob/main/text/0146-deflationary-fee-proposal.md">(source)</a></p>
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<p><strong>Table of Contents</strong></p>
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<ul>
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<li><a href="#rfc-0146-deflationary-transaction-fee-model-for-the-relay-chain-and-its-system-parachains">RFC-0146: Deflationary Transaction Fee Model for the Relay Chain and its System Parachains</a>
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<ul>
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<li><a href="#summary">Summary</a></li>
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<li><a href="#motivation">Motivation</a>
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<ul>
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<li><a href="#compensation-for-coretime-usage">Compensation for Coretime Usage</a></li>
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<li><a href="#value-accrual-and-deflationary-pressure">Value Accrual and Deflationary Pressure</a></li>
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</ul>
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</li>
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<li><a href="#stakeholders">Stakeholders</a></li>
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<li><a href="#sidenote-fee-assets">Sidenote: Fee Assets</a></li>
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<h1 id="rfc-0146-deflationary-transaction-fee-model-for-the-relay-chain-and-its-system-parachains"><a class="header" href="#rfc-0146-deflationary-transaction-fee-model-for-the-relay-chain-and-its-system-parachains">RFC-0146: Deflationary Transaction Fee Model for the Relay Chain and its System Parachains</a></h1>
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<div class="table-wrapper"><table><thead><tr><th></th><th></th></tr></thead><tbody>
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<tr><td><strong>Start Date</strong></td><td>20th May 2025</td></tr>
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<tr><td><strong>Description</strong></td><td>This RFC proposes burning 80% of transaction fees on the Relay Chain and all its system parachains, adding to the existing deflationary capacity.</td></tr>
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<tr><td><strong>Authors</strong></td><td>Jonas Gehrlein</td></tr>
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</tbody></table>
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</div>
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<h2 id="summary"><a class="header" href="#summary">Summary</a></h2>
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<p>This RFC proposes <strong>burning 80% of transaction fees</strong> accrued on Polkadot’s <strong>Relay Chain</strong> and, more significantly, on all its <strong>system parachains</strong>. The remaining 20% would continue to incentivize Validators (on the Relay Chain) and Collators (on system parachains) for including transactions. The 80:20 split is motivated by preserving the incentives for Validators, which are crucial for the security of the network, while establishing a consistent fee policy across the Relay Chain and all system parachains.</p>
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<ul>
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<li>
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<p>On the <strong>Relay Chain</strong>, the change simply redirects the share that currently goes to the Treasury toward burning. Given the move toward a <a href="https://polkadot-fellows.github.io/RFCs/approved/0032-minimal-relay.html">minimal Relay</a> ratified by RFC0032, a change to the fee policy will likely be symbolic for the future, but contributes to overall coherence.</p>
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</li>
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<li>
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<p>On <strong>system parachains</strong>, the Collator share would be reduced from 100% to 20%, with 80% burned. Since the rewards of Collators do not significantly contribute to the shared security model, this adjustment should not negatively affect the network's integrity.</p>
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</li>
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</ul>
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<p>This proposal extends the system's <strong>deflationary direction</strong> and is enabling direct value capture for DOT holders of an overall increased activity on the network.</p>
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<h2 id="motivation"><a class="header" href="#motivation">Motivation</a></h2>
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<p>Historically, transaction fees on both the Relay Chain and the system parachains (with a few exceptions) have been relatively low. This is by design—Polkadot is built to scale and offer low-cost transactions. While this principle remains unchanged, growing network activity could still result in a meaningful accumulation of fees over time. </p>
|
||
<p>Implementing this RFC ensures that potentially increasing activity manifesting in more fees is captured for all token holders. It further aligns the way that the network is handling fees (such as from transactions or for coretime usage) is handled. The arguments in support of this are close to those outlined in <a href="https://polkadot-fellows.github.io/RFCs/approved/0010-burn-coretime-revenue.html">RFC0010</a>. Specifically, burning transaction fees has the following benefits:</p>
|
||
<h3 id="compensation-for-coretime-usage"><a class="header" href="#compensation-for-coretime-usage">Compensation for Coretime Usage</a></h3>
|
||
<p>System parachains do not participate in open-market bidding for coretime. Instead, they are granted a special status through governance, allowing them to consume network resources without explicitly paying for them. Burning transaction fees serves as a simple and effective way to compensate for the revenue that would otherwise have been generated on the open market.</p>
|
||
<h3 id="value-accrual-and-deflationary-pressure"><a class="header" href="#value-accrual-and-deflationary-pressure">Value Accrual and Deflationary Pressure</a></h3>
|
||
<p>By burning the transaction fees, the system effectively reduces the token supply and thereby increase the scarcity of the native token. This deflationary pressure can increase the token's long-term value and ensures that the value captured is translated equally to all existing token holders.</p>
|
||
<p>This proposal requires only minimal code changes, making it inexpensive to implement, yet it introduces a consistent policy for handling transaction fees across the network. Crucially, it positions Polkadot for a future where fee burning could serve as a counterweight to an otherwise inflationary token model, ensuring that value generated by network usage is returned to all DOT holders.</p>
|
||
<h2 id="stakeholders"><a class="header" href="#stakeholders">Stakeholders</a></h2>
|
||
<ul>
|
||
<li>
|
||
<p><strong>All DOT Token Holders</strong>: Benefit from reduced supply and direct value capture as network usage increases.</p>
|
||
</li>
|
||
<li>
|
||
<p><strong>System Parachain Collators</strong>: This proposal effectively reduces the income currently earned by system parachain Collators. However, the impact on the status-quo is negligible, as fees earned by Collators have been minimal (around $1,300 monthly across all system parachains with data between November 2024 and April 2025). The vast majority of their compensation comes from Treasury reimbursements handled through bounties. As such, we do not expect this change to have any meaningful effect on Collator incentives or behavior.</p>
|
||
</li>
|
||
<li>
|
||
<p><strong>Validators</strong>: Remain unaffected, as their rewards stay unchanged.</p>
|
||
</li>
|
||
</ul>
|
||
<h2 id="sidenote-fee-assets"><a class="header" href="#sidenote-fee-assets">Sidenote: Fee Assets</a></h2>
|
||
<p>Some system parachains may accept other assets deemed <strong>sufficient</strong> for transaction fees. This has no implication for this proposal as the <strong>asset conversion pallet</strong> ensures that DOT is ultimately used to pay for the fees, which can be burned.</p>
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