Economics - Fees & Incentives

In order to support the robustness and security of Wisp, certain fees and incentives will be embedded as part of the various actions through the protocol. In this section, you can find an outline of these and their intended purpose. These fees are mainly aimed at incentivising the relayers to perform their job, as they incur transaction costs inside the rollups and computational costs for generating proofs.

Wisp Protocol has positive feedback loops and network effects!

• More messages = lower fee per message

• More relayers = lower latency per message

• Messages with loose latency requirements are effectively free

State Relay Economics

The state relay fee is paid by the user as an incentive for the relayers to relay the L1 state, and respectively the $R_{Source}$, inside $R_{Destination}$. This fee is locked and earmarked for the first relayer that brings the L1 block header that contains the message inside $R_{Destination}$. The state relay fee is the main driver of the economy of the Wisp Protocol.

Furthermore, this fee also ends up driving the Protocol towards becoming a public good - an L1 state oracle that any $R_{Destination}$ app can use. Somewhat similar to how DEXes like Uniswap, became public goods as a “price oracle” (with all related caveats), the $CRC_{State Relay}$, ensured and driven by the relay fee, will become an L1 state oracle.

A naive first version of the State Relay Fee structure can be done via price discovery auction, similar to the workings of Ethereum pre-EIP1559. The similarity to the gas auction means that the users can pay as much as they see fit, depending on the urgency of the message and the willingness and profit desires of any particular relayer.

Unlike the pre-EIP1559 gas auctions for Ethereum, this behaviour does not necessarily lead to overpaying. While in L1, the users were competing for block space, in the Wisp Protocol, users are accumulating their fees together. A relayer that generate $SNARK_{L1 State}$ can post it on every supported Rollup processing all messages for that time period and can claim the fees for any and all of them. This creates an interesting crypto economical game where the users are actually in advantage as Relayers can accumulate many “cheap” transactions instead of waiting for fewer but more profitable ones. This naturally increases the robustness of the system as different relayers will have different profit goals and thresholds.

Furthermore, the synergy grows even stronger with the adoption of the Wisp Protocol and the increase in the number of $CRC_{msg}$ being passed. The Relayers will have increased profit per state relay (albeit for the same amount of work) and the users will pay lower fees for the same speed of relay.

The state relay fee is received by the state relayer upon submission of the $CRC_{State Relay Ack}$ message. This allows the relayer to claim the state relay fees of all the messages in past blocks since the last state relay into $R_{Destination}$.

Message Delivery Economics

The delivery fee is an optional fee paid by the user as an indication that they want the $CRC_{Delivery}$ message to be delivered by a relayer.

If this fee is 0, this indicates that the user will be doing a “self-delivery” - they will perform the send transaction that verifies the delivery inside $C_{Inbox}$ on $R_{Destination}$ and trigger the $App_{Dest Rollup}$ themselves. If the fee is non-zero, any relayer can decide on taking up the job of delivering the message.

Similarly to Cosmos IBC relayers, it makes sense for the relayers to publish a minimum fee they are willing to accept in order to carry out the delivery. This will act as a delivery marketplace.

The delivery fee is received by the state relayer upon submission of the $CRC_{Delivery Ack}$ message. This allows the relayer to claim the delivery fees of all the messages they have sent the delivery transaction inside $R_{Destination}$.

Network Effects

As mentioned in the section about state relay fees, the growth of the usage of Wisp actually will drive down the fees. Furthermore, there is an opportunity for 0 fees for communication as long as the user does not require speedy delivery.

Due to having a single unified state of L1, in a sense, any user can "piggyback" the other user's state relay.