Polkadot Governance Proposal: Cross-Chain Gas Fee Circulation System

Governance
1

Summary

This proposal introduces a Cross-Chain Gas Fee Circulation System for the Polkadot ecosystem. It enables users to pay gas fees in any supported token across parachains while ensuring collators and validators are compensated in their required native tokens. This system enhances usability, improves liquidity efficiency, and streamlines cross-chain transactions.

Problem Statement

The current gas fee system in Polkadot creates friction for users interacting with multiple parachains:

  • Users must acquire the native gas token of each parachain they interact with.
  • Bridging gas tokens between chains is costly, slow, and inefficient.
  • Liquidity is fragmented as gas fees are locked in different tokens across parachains.
  • Collators and validators require guaranteed payment in their native tokens to maintain network security.

These challenges hinder cross-chain operations and limit Polkadot’s adoption potential.

Proposed Solution: Gas Fee Circulation System

To address these issues, we propose a Gas Fee Circulation System powered by a gas liquidity pool. This system will:

  1. Allow users to pay gas fees in any supported token (e.g., DOT, USDT, or other assets).
  2. Automatically convert tokens into the required native gas token using on-chain decentralized exchanges (DEXs) like HydraDX or StellaSwap.
  3. Ensure collators and validators receive their native tokens for block production and transaction validation.
  4. Provide safeguards against volatility and insufficient liquidity through collateralized mechanisms and real-time price monitoring.

Technical Implementation

1. Gas Pool Module

  • A Substrate pallet will manage incoming gas payments and outgoing validator rewards.
  • The module will maintain a liquidity pool of supported tokens for real-time swaps.

2. Fee Matching Algorithm

  • Prioritizes high-liquidity token pairs for efficient swaps.
  • Implements a dynamic rebalancing system to distribute fees across parachains.

3. Automated Token Conversion

  • Leverages DEXs on Polkadot (e.g., HydraDX, StellaSwap) to swap tokens in real time.
  • Includes a fallback mechanism if liquidity is insufficient.

4. Collateralized Gas Vault

  • Users can stake assets to ensure stable payments and liquidity availability.
  • Protects against volatility and sudden token devaluation.

5. Real-Time Exchange Rate Monitoring

  • Integrates on-chain oracles (e.g., Chainlink, DIA, Band Protocol) for price data.
  • Prevents transactions in unstable or low-liquidity tokens.

Benefits

  • Users can pay gas fees in any token, eliminating the need to acquire native gas tokens.
  • Cross-chain transactions become seamless, reducing complexity in Polkadot.
  • Validators and collators always receive the correct native token, securing incentives.
  • Improves liquidity efficiency across parachains by utilizing token reserves effectively.
  • Ensures system stability with safeguards against token crashes and insufficient liquidity.

Implementation Plan

  1. Develop the Gas Pool Pallet and integrate it into Substrate.
  2. Implement and test the Fee Matching Algorithm on a testnet.
  3. Deploy Automated Token Conversion mechanisms with on-chain liquidity providers.
  4. Launch the Collateralized Gas Vault to secure validator payments.
  5. Integrate Real-Time Exchange Rate Monitoring with oracle solutions.
  6. Conduct audits and deploy on Kusama for testing before Polkadot mainnet release.

Call to Action

We propose that the Polkadot Treasury allocate funding for research, development, and deployment of the Gas Fee Circulation System. Community feedback and developer collaboration are essential to making this vision a reality.

:loudspeaker: Vote YES to improve Polkadot’s usability and cross-chain experience.
:x: Vote NO to retain the current fragmented gas fee system.