Fee system

In order to be accepted by the Namada ledger, transactions must pay fees. Transaction fees serve two purposes: first, the efficient allocation of block space and gas (which are scarce resources) given permissionless transaction submission and varying demand, and second, incentive-compatibility to encourage block producers to add transactions to the blocks which they create and publish.

Namada transaction fees can be paid in any fungible token which is a member of a whitelist controlled by Namada governance. Governance also sets minimum fee rates (which can be periodically updated so that they are usually sufficient) which transactions must pay in order to be accepted (but they can always pay more to encourage the proposer to prioritize them). When using the shielded pool, transactions can also unshield tokens in order to pay the required fees.

The token whitelist consists of a list of $(T, GP_{min})$ pairs, where $T$ is a token identifier and $GP_{min}$ is the minimum (base) price per unit gas which must be paid by a transaction paying fees using that asset. This whitelist can be updated with a standard governance proposal. All fees collected are paid directly to the block proposer (incentive-compatible, so that side payments are no more profitable).

Fee payment

The WrapperTx struct holds all the data necessary for the payment of fees in the form of the types: Fee, GasLimit and the PublicKey used to derive the address of the fee payer which coincides with the signer of the wrapper transaction itself.

Since fees have a purpose in allocating scarce block resources (space and gas limit) they have to be paid upfront, as soon as the transaction is deemed valid and accepted into a block (refer to replay protection specs for more details on transactions' validity). Moreover, for the same reasons, the fee payer will pay for the entire GasLimit allocated and not the actual gas consumed for the transaction: this will incentivize fee payers to stick to a reasonable gas limit for their transactions allowing for the inclusion of more transactions into a block. Since the gas used by a transaction leaks a bit of information about the transaction itself, a submitter may want to obfuscate this value a bit by increasing the gas limit of the wrapper transaction (refer to section 2.1.3 of the Ferveo documentation (opens in a new tab)).

Fees are not distributed among the validators who actively participate in the block validation process. This is because a tx submitter could be side-paying the block proposer for tx inclusion which would prevent the correct distribution of fees among validators. The fair distribution of fees is enforced by the stake-proportional block proposer rotation policy of Cometbft.

By requesting an upfront payment, fees also serve as prevention against DOS attacks since the signer needs to pay for all the submitted transactions. More specifically, to serve as a denial-of-service and spam prevention mechanism, the fee system needs to enforce:

1. Successful payment at block inclusion time (implying the ability to check the good outcome at block creation time)
2. Minimal payment overhead in terms of computation/memory requirements (otherwise fee payment itself could be exploited as a DOS vector)

Given that transactions are executed in the same order they appear in the block, block proposers will tend to a common behavior: they'll place all the wrapper transactions before the decrypted transactions coming from the previous block. By doing this, they will make sure to prevent inner transactions from draining the addresses of the funds needed to pay fees. The proposers will be able to check in advance that fee payers have enough unshielded funds and, if this is not the case, exclude the transaction from the block and leave it in the mempool for future inclusion. This behavior ultimately leads to more resource-optimized blocks.

As a drawback, this behavior could cause some inner txs coming from the previous block to fail (in case they involve an unshielded transfer) because funds have been moved to the block proposer as a fee payment for a WrapperTx included in the same block. This is somehow undesirable since inner transactions' execution should have priority over the wrapper. There are two ways to overcome this issue:

1. Users are responsible for correctly timing/funding their transactions with the help of the wallet
2. Namada forces in protocol that a block should list the wrappers after the decrypted transactions

If we follow the second option the block proposers will no more be able to optimize the block (this would require running the inner transactions to calculate the possibly new unshielded balance) and, inevitably, some wrapper transactions for which fees cannot be paid will end up in the block. These will be deemed invalid during validation so that the corresponding inner transaction will not be executed, preserving the correctness of the state machine, but it represents a slight underoptimization of the block and a potential vector for DOS attacks since the invalid wrapper has allocated space and gas in the block without being charged due to the lack of funds. Because of this, we stick to the first option.

Fees are collected via protocol for WrapperTxs which have been processed with success: this is to prevent a malicious block proposer from including transactions that are known in advance to be invalid just to collect more fees. Given the two-block execution model of Namada (wrapper and inner tx) and the need to collect fees for the allocated resources, nothing can be done in case the inner transaction fails: by that point, fees have already been collected and no refunds will be issued, meaning that the inner tx signer is responsible for submitting a semantically valid transaction for the state of the application (importance on the lifetime parameter of the tx here).

Since a signer might submit more than one transaction per block, the process_proposal function needs to cache the updated unshielded balance to correctly manage fees. To guarantee that the results coming from this process are correct, Namada imposes that all the wrapper transactions in a block are listed before the inner transactions. This is already the expected behavior of the block proposers (as stated before) but we need to enforce it in protocol: if this wasn't the case, an inner transaction placed in between wrappers could modify a balance involved in fee payment, leading to a miscalculation of the balance itself which would cause a late rejection of the block in finalize_block.

If enough funds are available, these are deducted from the unshielded storage balances of the fee payers and directed to the balance of the block proposer. If instead, the balance is not enough to cover fees, then the proposed block is considered invalid and rejected, the WAL is discarded and a new Cometbft round is initiated.

From the consensus block proposer's address (included in the Cometbft request), it is possible to derive the relative Namada address for the payment: should, for any reason, the proposer's address be missing in the incoming request, fees for that block will be burned.

The Fee field of WrapperTx is defined as follows:

pub struct Fee {
  /// amount of the fee
  pub amount: Amount,
  /// address of the token
  pub token: Address,
}

The signer of the wrapper transaction defines the token in which fees must be paid among those available in the token whitelist. At the same time, he also sets the amount which must meet the minimum price per gas unit for that token, $GP_{min}$ (also defined in the whitelist). The difference between the minimum and the actual value set by the submitter represents the incentive for the block proposer to prefer the inclusion of this transaction over other ones.

The block proposer can check the validity of these two parameters while constructing the block. These validity checks are also replicated in process_proposal and mempool_check. In case a transaction with invalid parameters ended up in a block, the entire block would be rejected (as already explained earlier in this document). As mentioned before, a signer might submit more than one transaction per block and the proposer should take into consideration the updated value of the unshielded balance.

Since the whitelist can be changed via governance, transactions could fail these checks in the block where the whitelist change happens. For mempool_check, the checks could reject transactions that may become valid in the future or vice-versa: since we can assume a slow rate of change for these parameters and mempool and block space optimizations are a priority, it is up to the clients to track any changes in these parameters and act accordingly.

Unshielding

To provide improved data protection, Namada allows the signer of the wrapper transaction to unshield some funds on the go to cover the cost of the fee. This also addresses a possible locked-out problem in which a user doesn't have enough funds to pay fees (preventing any sort of operation on the chain). The WrapperTx struct must be extended as follows:

pub struct WrapperTx {
  /// The fee to be paid for including the tx
  pub fee: Fee,
  /// Used to determine an implicit account of the fee payer
  pub pk: common::PublicKey,
  /// Max amount of gas that can be used when executing the inner tx
  pub gas_limit: GasLimit,
  /// The optional unshielding transaction for fee payment
  pub unshield: Option<Transaction>,
  /// the encrypted payload
  pub inner_tx: EncryptedTx,
  /// sha-2 hash of the inner transaction acting as a commitment
  /// the contents of the encrypted payload
  pub tx_hash: Hash,
}

The new unshield field carries an optional masp transaction struct. The unshielding operation is exempt from paying fees and doesn't charge gas. To execute it, validators will construct a valid Transfer transaction embedding the provided unshielding Transaction.

The proposer and the validators must also check the validity of the optional unshielding operation attached to the wrapper. More specifically the correctness implies that:

1. The unshielding provides just the right amount of funds to pay fees
2. The actual wasm execution runs successfully

The first condition can be enforced during the Transfer construction and requires that:

1. The shielded field must be set to Some
2. The source address must be the masp. The target address is that of the wrapper signer
3. The token is the one specified in the Fee struct
4. The amount, added to the already available unshielded balance for that token, is just enough to cover the fees, i.e. the value given by $Fee.amount * GasLimit$ (to prevent leveraging this transfer for other purposes)
5. The amount of spent and created notes must be within a well defined limit to prevent DoS

The spending key associated with this operation could be relative to any address as long as the signature of the transfer itself is valid. Verifying that the origin of the transaction is the same as the wrapper's source would be impossible anyway for two reasons:

• the transaction is crafted in protocol and cannot be signed with the wrapper's signer private key
• transparent addresses and spending keys are unrelated

If any of the checks fail, the transaction must be discarded. Once these controls have been performed, the block proposer should run the actual transfer against the current state of the application to check whether the transaction is valid or not: if this succeeds the transaction can be included in the block, otherwise it should be discarded. During this execution a gas limit is set to prevent DoS.

These same checks are done by the validators in process_proposal: if any of them fail, the entire block is rejected. The balance key must be searched in the local cache before the storage to ensure a correct computation in case of transactions involving the same addresses.

Governance proposals

Governance proposals may carry some wasm code to be executed in case the proposal passed. This code is embedded into a DecryptedTx directly by the validators at block processing time and is not inserted into the block itself. These transactions are exempt from fees and don't charge gas.

Protocol transactions

Protocol transactions can only be correctly crafted by validators and serve a role in allowing the chain to function properly. Given these, they are not subject to fees and do not charge gas.

Gas accounting

Gas must take into account the two scarce resources of a block: gas and space.

Regarding the space limit, Namada charges, for every WrapperTx, a fixed amount of gas per byte.

For the gas limit, we provide a mapping between all the whitelisted transactions and non-native VPs to their cost in gas units: more specifically, the cost of a tx/VP is given by the run time cost of its wasm code. A transaction is also charged with the gas required by the validity predicates that it triggers.

In addition to these, each inner transaction spends gas for loading the wasm module from storage, compilation costs (of both the tx and the associated, non-native, VPs) which are charged even if the compiled transactions was already available in cache, ancillaries operations (like loading non-native VP modules from storage) and the calls to the exposed host functions.

To summarize, the gas for a given wrapper transaction can be computed as:

$\begin{aligned} Gas & = WrapperSize \\ & + TxFixedRuntimeGas \\ & + NonNativeVpsFixedRuntimeCost \\ & + 2 * WasmModuleSize \\ & + MiscOpsGas \\ & + HostFnsCallsGas\end{aligned}$

Gas accounting is about preventing a transaction from exceeding two gas limits:

1. Its own GasLimit (declared in the wrapper transaction)
2. The gas limit of the entire block

Wrapper GasLimit

The protocol injects a gas counter in each transaction and VP to be executed which allows monitoring of the exact amount of gas utilized. To do so, the gas meter simply checks the hash of the transaction or VP against the table in storage to determine which one it is and, from there, derives the amount of gas required.

To perform the check we need the limit which was declared by the corresponding wrapper transaction: this can be recovered from the queue of WrapperTxs in storage.

Since the hash can be retrieved as soon as the transaction gets decrypted, we can immediately check whether the GasLimit set in the corresponding wrapper is enough to cover this amount. This check, though, is weak because we also need to keep in account the gas required for the involved VPs which is hard to determine ahead of time: this is just an optimization to short-circuit the execution of transactions whose gas limit is not enough to cover even the tx itself.

When executing the VPs in parallel the procedure is the same and, again, since we know ahead of time the gas required by each VP we can immediately terminate the execution if it overshoots the limit.

In any case, if the gas limit is exceeded, the transaction is considered invalid and all the modifications applied to the WAL get discarded. This doesn't affect the other transactions which can be executed normally (see the following section).

Block GasLimit

This constraint is given by the following two:

• The compliance of each inner transaction with the WrapperTx gas limit explained in the previous section
• The compliance of the cumulative wrapper transactions' GasLimit with the maximum gas allowed for a block

Cometbft provides a BlockSize.MaxGas parameter, and applies some optional validation in mempool if this parameter is initialized. It doesn't instead perform any check in consensus, leaving this task to the application itself (see cometbft app spec (opens in a new tab), cometbft spec (opens in a new tab). Therefore, instead of using the Cometbft provided param (and its mempool validation), Namada introduces a MaxBlockGas protocol parameter. This limit is checked during mempool and block validation, in process_proposal: if the block exceeds the maximum amount of gas allowed, the validators will reject it.

Note that block gas limit validation should always occur against the GasLimit declared in the wrappers, not the real gas used by the inner transactions. If this was the case, in fact, a malicious proposer could craft a block exceeding the gas limit with the hope that some transactions may use less gas than declared: if this doesn't happen, the last transactions of the block will be rejected because they would exceed the block gas limit even though they were charged fees in the previous block, effectively suffering economic damage. In this sense, since the wrapper tx gas limit imposes an economic constraint, it is the reference point for all the gas limit checks.

Given that the block allocates a certain gas for each transaction and that transactions are prevented from going out of gas, it derives that the execution of each transaction is isolated from all the other ones in terms of gas, which explains the last statement of the previous section.

Checks

This section summarizes the checks performed in protocol.

Alternatives considered

Inter-chain fee payment

One may want to pay fees for a WrapperTx on Namada with some funds kept on a different chain that can communicate with Namada, so either Ethereum or an IBC-compatible chain.

This solution, though, has the following drawbacks:

• Require an internal address (with the corresponding VP) as a target of the payment (cannot pay to the block proposer directly)
• Since the payment must be initiated from another chain it must happen at least one block ahead of the wrapper transaction for which it's paying the fee. This means that the fee payment effectively happens in advance and we would need a mechanism to map a payment to a specific wrapper transaction
• The payer would be an address outside of Namada which could be a problem in terms of accountability

Moreover, this technique is already feasible: it is sufficient to move funds from the external chain to an address on the Namada chain which requires the same amount of operations and the same costs.

So, at the cost of increased complexity of the Namada logic, this type of payment doesn't actually introduce any new feature.

Shielded fee payment

Shielded fee payment should not be supported since that would make it impossible for validator nodes to check the correctness of the payment: they could only check that the transaction run without errors but would not be able to determine the exact amount paid (which must match the GasLimit) and the token involved (must be a whitelisted one).