On June 27, Radix Publishing will be publishing a Radix node update that will allow the Radix Public network to make its first updates to network fees and emissions since mainnet launch. This was made possible by a recent update to the Radix Node that makes it possible for protocol updates to be enacted simultaneously across the Radix Network without disruption.
If you’d like to know more about these updates – and the policy for such updates in the future – read on.
Why a Fee/Emissions update now?
The goals of the Radix tokenomics have always included two important features:
- Transaction fees are intended to remain relatively stable in fiat terms
- Emissions are intended to incentivize validators and node-runners at a rate of roughly 300m new XRD tokens per year
Unfortunately, both of these currently require “tuning”. The network has no notion of the current XRD price in fiat terms, so it has no way to automatically adjust the transaction fee table. The network also has no concept of real-world “wall clock” time, and so it’s only possible to define an emission rate on a per-epoch basis that approximates 300m XRD per year based on current average epoch duration.
As the price of XRD has moved since launch, and the average epoch speed has increased since launch, it has been clear for some time that an update to the Radix protocol was needed to “re-tune” these parameters. In fact it seems appropriate to propose such re-tuning updates on a somewhat regular basis, as needed.
Prior to this point, proposing such updates to the Radix protocol would have required a challenging and highly-coordinated switchover process with the Radix node-runner community to do so in an orderly way. The development team has been working on a better way.
You may not even have noticed it, but recently an update to the Radix Node was rolled out that implements a feature that the development team has been on for some time: coordinated updates to the protocol version. You can read more about coordinated protocol updates here, but in short, it means updates to important parts of the Radix protocol can be done in a way that is low-effort for node-runners and minimizes any possible network disruption during the switchover.
And this means that updates for things like network fees and emissions can be published without putting an excessive burden on node-runners.
What are the Fee/Emissions updates about to be published?
A new version of the Radix Node implementing the updates below is planned to be published on Monday, June 27. The configuration for this protocol update will specify that the earliest the network can move to the new protocol version will be approximately 9 days later, although the actual switch may take longer depending on how quickly node-runners install the update and register their readiness with the network.
To understand how the real proposed values for transaction fees and emissions will be picked, read below about the Fee/Emissions Updating Process.
Network Fee Update
The initial transaction fee table at Radix Public Network genesis was based on the eXRD token sale price of $0.039 / XRD. Of course now XRD has a real known fiat value on exchanges. Therefore it is appropriate to update the fee table to more closely match its current fiat value of roughly $0.06 / XRD (at time of writing this post). Assuming this fiat value holds for the day of the update, this means that after the update, the same transaction should cost about 65% what it does now.
Emissions Rate Update
The initial XRD emissions rate at Radix Public Network genesis was based on the duration of epochs that were observed during the original Olympia betanet period before mainnet launch. In reality, the network has been moving more quickly. Therefore an update will be proposed that will use this more current epoch duration to set the per-epoch emissions rate to be back in line with the targeted 300m XRD / year.
What is the policy for publishing Fee/Emissions updates?
With the ability to perform coordinated protocol updates at the network’s disposal, updates to fees and emissions (and other more functional updates) can happen more easily and often without causing significant node-runner disruption. For the future, the following policy will be used as a guide for when and how updates are published.
Network Fee Updating Policy
At any point in time, there is a current network XRD/USD price that was used as the basis for the Network fee table currently adopted on the Radix Public Network.
Radix Publishing will use a reputable source for the XRD market price, in USD, to watch the 7-day simple moving average of XRD price. If that 7-day SMA price deviates by a factor of 2 (less than 50% or more than 200%) from the current network XRD/USD price, the target will be to publish a Radix Node with an updated fee table based on a new current network XRD/USD price within 2 weeks – but it may take longer if other planned updates or development commitments make this impractical.
The price used will be the 7-day SMA price on the day that the new Node is published.
If such an update is published, it will also include an update to the Emissions Rate, calculated as in the following section.
Emissions Rate Updating Policy
At any point in time, there is a current network average epoch duration that defines the maximum amount of XRD that are emitted to node-runners and stakers (before any burning due to non-participation penalties) in order to equal 300m XRD emitted per year.
The actual duration of epochs on the Radix Public Network will be observed over time in order to watch the 30-day simple moving average of epoch duration. If this 30-day SMA deviates by a factor of 1.2 (less than 83% or more than 120%) from the current network average epoch duration, the target will be to publish a Radix Node with an updated emissions rate within 2 weeks – but it may take longer if other planned updates or development commitments make this impractical.
The updated per-epoch emission rate will target 300m XRD / year based on an epoch duration set by the 30-day SMA epoch duration on the day that the new Node is published. Note that this does not attempt to compensate for past low/high emissions rates – only bring it back in line with a 300m XRD / year target. This does not change the maximum XRD that shall be emitted over the lifetime of the emissions program of 24Bn tokens – meaning that the estimated 40-year duration of the program may be somewhat reduced or increased.
Note that per the Network Fee Updating Policy above, the Emissions Rate may be adjusted even when the epoch duration does not deviate by more than a factor of 1.2.