Fees and rewards
In this page we provide more details regarding fees on the bitcoin network and L2 subnet.
Fees on bitcoin
Who pays the fees for each transaction on the bitcoin network:
create-subnet tx: It is submitted by the creator of the subnet, who also pays the bitcoin fees.
join-subnet tx: It is submitted by each validator who wants to join a subnet. The validator pays the bitcoin fees.
fund tx: It is submitted by any user that wants to deposit funds from bitcoin to an L2 subnet, who also pays the bitcoin fees.
checkpoint tx: It is submitted periodically by a relayer. The bitcoin fees are taken from the subnet multisig. A checkpoint transaction may contain multiple release operations (withdraw funds from an L2 subnet to bitcoin) and cross-chain transfers; the bitcoin fees for all these operations are paid only once.
stake/unstake/leave tx: The validator that submits the transaction pays the fees.
Required funding:
Validators and users must have sufficient funds on bitcoin
The subnet multisig can be funded by the validators, using the fund operation, in order to cover the fees for submitting checkpoint transactions to the parent.
Fees in subnets
Who pays the fees for each transaction on an L2 subnet:
release: This is a subnet transaction, submitted by any user that wants to release funds (this does not include validator collateral) from the L2 subnet to bitcoin. It is a standard subnet transaction and the user pays the fees.
transfer: For both intra-subnet and cross-subnet transfers, the sender pays the fees for submitting a transaction in the source subnet.
bottom-up messaging: The bottom-up functionality results in submitting a checkpoint transaction on bitcoin. For the checkpoint message to be created (votes are collected in a smart contract in the subnet) and the bitcoin transaction to be signed (signatures are collected in a smart contract in the subnet) some data have to be submitted in the subnet by the validators. There are no fees for these transactions in the subnet, as they have been implemented as direct calls to the EVM state in Fendermint.
top-down messaging: The top-down messages include fund, stake, and other events that come from the parent into the child subnet. A round of voting is done in the subnet for each event. Similar to the bottom-up messaging, there are no fees for these calls.
Rewards for subnet validators
The subnet fees are distributed among validators, as specified by the standard IPC codebase and Fendermint. This way validators are rewarded for maintaining the subnet and compensated for the bitcoin fees they have to pay.
Rewards for relayers
Although relayers do not pay any fees, they could be rewarded for the service they provide. This can be implemented on bitcoin by creating an additional output UTXO for each checkpoint transaction, which contains the relayer reward. We leave this as future work.
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