# Fee Model Fees in KRC-20 are denominated and settled in **bridged KAS**. The fee model is designed around two primary objectives: **state sustainability** and a **closed-loop security incentive system**. First, it applies economic cost constraints to the uncontrolled growth of KRC-20 state, mitigating long-term state bloat. Second, fees generated by KRC-20 activity are primarily used to reward Layer-1 miners participating in the Rollup process. Combined with the RTD-Rollup’s decentralized data-submission mechanism, this provides additional incentives to Kaspa while strengthening overall network security and establishing a coherent economic foundation. To ensure protocol predictability and usability, KRC-20 adopts a minimalistic pricing policy. Transactions that do not introduce new state incur no KRC-20 fee and only pay the Layer-1 on-chain transaction fee. For transactions that **create new state**, KRC-20 charges a fixed fee based on the OP type, establishing an explicit and predictable cost for state expansion. If a transaction fails during execution, no KRC-20 fee is charged (however, any Layer-1 fees already paid are non-refundable). KRC-20 also supports **unified settlement** and **automatic netting** between Layer-1 and KRC-20 fees: Layer-1 fees already paid are automatically credited toward the total fee obligation. For example, if the total fee is 1 KAS and the Layer-1 transaction has paid 0.15 KAS, then the KRC-20 fee is automatically computed as 0.85 KAS. Collected KRC-20 fees are automatically split according to a fixed ratio (initially 9:1) into a **Rollup reward pool** and a **burn pool**. The reward pool is used to distribute additional earnings to Rollup miners. The burn pool is used to execute KAS burning, introducing a verifiable KAS deflation mechanism. Burning is performed by the Native Bridge: from the Layer-1 bridge reserve pool, the accumulated amount designated for burning is transferred to the **black-hole address (kaspa:qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqkx9awp4e)**, ensuring that the post-burn redeemable bridged balance remains consistently aligned with the bridge reserve’s available funds. For the fee definitions of different OP types, refer to the section [KRC-20 OPs](/krc20/technical-overview/krc-20-ops.md). --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs-kasplex.gitbook.io/krc20/protocols/fee-model.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.