Waves_Dynamic_Transaction_Fee_and_Fee_Burn_Monetary_Policy.pdf (365.9 KB)
I would like to propose a new Dynamic Transaction Fee and Fee-Burn Monetary Policy model for the Waves network.
At the current WAVES price, network fees have become extremely low in USD terms. For example, a standard Transfer costs 0.001 WAVES and a basic Invoke Script transaction costs 0.005 WAVES. While this keeps Waves inexpensive to use, transaction fees currently provide limited economic value to generators and do not contribute meaningfully to WAVES tokenomics.
The proposal introduces three community-controlled fee levels:
x1 / x10 / x20
After the feature itself is activated through the standard Waves feature voting process, generator nodes would be able to vote on the active fee multiplier using a monetary-policy mechanism similar to block reward voting, with a 5,001 / 10,000 block majority required for a change.
The proposed economic model is:
- x1: no burn, 100% of transaction fees remain in the generator fee pool.
- x10 / x20: 50% of transaction fees are burned and 50% are distributed to generators.
- The existing Waves-NG 40/60 fee distribution between the current and next generator is preserved.
- Unit0 consensus-critical transactions remain at x1 with no burn, preventing the general fee increase from creating an additional cost burden for high-frequency Unit0 operations.
- Critical infrastructure such as price oracles and keepers may use capped multipliers rather than receiving full exemptions.
Using WavesOnChain’s latest 30 completed days of network fee data, Waves generated approximately 238 WAVES per day in transaction fees on average.
If network activity remained unchanged, an x20 regime would result in approximately:
4,760 WAVES/day in total transaction fees
2,380 WAVES/day distributed to generators
2,380 WAVES/day burned
This corresponds to roughly 869,000 WAVES of annualized fee burn, while aggregate generator transaction-fee revenue would increase by approximately 10x.
Even if fee-generating activity declined substantially after the increase, the economics remain notable. Under x20, if activity fell to only 25% of today’s level, aggregate generator fee revenue would still be approximately 2.5x the current level.
The objective is not simply to increase fees. The broader goal is to introduce a second community-controlled monetary mechanism alongside block rewards:
Block rewards create WAVES to support network security, while transaction activity can remove WAVES from supply through fee burning.
At the same time, the proposal attempts to preserve Waves’ low-fee competitiveness and protect infrastructure whose economics are fundamentally different from ordinary user transactions.
The attached paper contains the full economic analysis, transaction-demand scenarios, Unit0 and oracle considerations, Waves-NG accounting, sponsored-fee implications, governance design, migration requirements, and a draft technical WEP specification.
I would especially appreciate feedback from node operators and developers on the following points: the x1/x10/x20 multiplier structure, the 50/50 burn-generator split, the 5,001/10,000 voting mechanism, and the proposed treatment of Unit0 and other critical infrastructure.