Polkadot’s Transaction Fee Mechanism: Proposal to Burn a Portion of Transaction Fees on the Relay Chain and System Chains
Overview
This Wish for Change (WFC) referendum proposes burning a portion of the transaction fees generated on the Relay Chain and system chains like Asset Hub, instead of accumulating them in the Treasury. The goal is to optimize Polkadot’s internal economy.
This referendum represents a logical next step following Referendum RFC#10, which established a fixed income for the Treasury. Adding transaction fees to the Treasury would result in a form of double financing for it, which this proposal seeks to address.
This referendum originates from discussion Burning transaction fees on the Polkadot Forum, which have been active for 30 days and highlight alignment with the broader Polkadot community’s preferences.
Main Proposal
This WFC proposes:
Maintaining the current allocation of 20% of collected fees to validators and collators.
Burning the remaining portion of transaction fees generated on the Relay Chain and system chains.
This approach ensures functional equivalence: funding operational costs through inflation while burning fees effectively acts as a direct value transfer from users to network-supporting actors.
Technical Details
The proposed changes include:
Revenue Structure: 20% of fees will continue to be allocated to validators and collators.
Automatic Burning: The remaining 80% of fees will be burned at the protocol level.
Balanced Inflation: Operational costs will continue to be funded through predefined inflation, with the inflationary effect offset by burning fees.
Voting AYE
Voting AYE for this proposal reflects your support for a more efficient and sustainable economic model for Polkadot. Specifically:
Maintaining the 20% fee allocation for validators and collators.
Burning the remaining portion of fees generated on the Relay Chain and system chains.
Important
This WFC referendum cannot be binding, i.e., there is no mechanism to force the chain to update these parameters. Instead, it is a method to aggregate the opinion of voters through OpenGov and offers some commitment of the community to this WFC on the social layer.