# 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](https://docs-kasplex.gitbook.io/krc20/technical-overview/krc-20-ops).