Overview

The Fee Market is a cross-chain protocol that operates as a market-based system, incentivizing relayers to efficiently deliver cross-chain messages. By implementing a profitability mechanism, the Fee Market encourages active participation from relayers, leading to a more robust and sustainable cross-chain transaction system.

In the context of calculating fees for cross-chain messages, the Fee Market differs from traditional Oracle solutions. Typically, determining the fee involves considering the token value exchange ratio between the source and target chains in real-time, a task often performed by Oracles. However, the Fee Market mechanism eliminates the need for real-time awareness of token value exchange ratios on the blockchain. Instead, it relies on quotes provided by relayers to generate the final fee for cross-chain transactions. This approach allows for flexibility and adaptability, as relayers play a crucial role in determining the fees based on market conditions. The relayer is the third off-chain role of the message carrier, responsible for delivering messages between the source and target chains. Before delivering a message, the relayer calculates its own costs and expected profits by combining the transaction fees of the source and target chains and finally submits its own quote to the fee market. When the fee market has received enough quotes, it selects a suitable quote as the cross-chain fee at that moment according to the pre-defined rules.

Design Principles

Users use native tokens of the source chain as the only method of cross-chain payment. We believe this approach provides the best user experience, eliminating the need for users to worry about target chain accounts and fees.”

The cross-chain fees paid by users are generated by the fee market system and the final price quoted by the fee market is influenced by all relayers involved in the delivery of messages throughout the market.

The cost on the target chain is at the expense of the relayer who claims the handling fee on the source chain with the proof of delivery after delivery is completed successfully. To incentivize relayers, the fee market system should ensure the relayers gain is greater than the cost in long term. If an automatic pricing mechanism is infeasible, relayers should be able to give their offers manually and shoulder the cost of offering. The relayers should be punished if they fail to relay the message as expected.

Relayers and Users constitute a secondary supply-and-demand market, where quotes rise when relayers number is low and fall when relayers number is abundant. There are no access restrictions for relayers, and anyone can enter. Relayer should evaluate and quote at their own discretion as an economically rational person. An incomplete list of risks that relayers should take into account is as follows:

Fluctuation in token prices and exchange ratios;
Time delay between quoting and claiming;
Loss of staking funds due to software or network failures;

Tiered Quotation Mechanism

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This approach is suitable for scenarios with lower gas fee on the source chain and shorter finality time. It has better versatility, reliability, and robustness. Such networks include Heco, BSC, Polygon and Darwinia.

First, the relayers must register in the fee market system and post their quotes based on the reference price and the expected profit on the blockchain at any time. An off-chain pricing system maintains the reference price. Each relayer should lock a sufficient default margin on the chain to guarantee the faithful execution of the deal.

In this way, a series of quoted prices (price meanings fee per message) come into being in the ascending order on the blockchain. When the user initiates a cross-chain request on the source chain, the lowest n quoted prices are filtered out and the last one is used as the billing price. Those who make these prices are called Assigned Relayers. User can send cross-chain messages after paying billing price on the source chain, then wait for message execution on the target chain. The assigned relayers are responsible for ensuring the success of cross-chain message delivery and need to monitor their running relayer clients closely. If a cross-chain message is not executed in the specified time on the target chain, all assigned relayers will be penalised. The reason that we select n relayers as assigned relayers is that we want to have redundancy for executing the message delivery. Note that if the count of relayers in current market are less than n when some users sends cross-chain message, it means the fee market system fails to provide a price for user sending cross-chain message, and the dispatch call user sent on the source chain will simply fail and exit.

In any time, the message delivery and confirmation relayer can be anyone, do not have be the assigned relayer. However, there is an additional bonus for being an assigned relayer as a reward for guarding the cross-chain messaging service. In order to better manage the responsibilities of the n assigned relayers, each assigned relayer is given a time slot (from the creation of the cross-chain message), meaning that the assigned relayer is obliged to deliver the cross-chain message in the allocated time slot. If a message is supposed to be delivered to the target chain in one of the assigned relayer's time slots, but it is not, the assigned relayer is considered to have acted badly and will be penalised for locked assets, or even removed from the set of assigned relayers.

Reward And Slash Rules

Key Parameters

When calculating rewards and penalties, the following parameters are crucial.

DutyRelayersRewardRatio - The reward ratio for the assigned relayer.

MessageRelayersRewardRatio - The reward ratio for the message relayer.

ConfirmRelayersRewardRatio - The reward ratio for the comfirm relayer.

AssignedRelayerSlashRatio - The slash ratio for the unduty assigned relayer.

Slot - A fixed block period time to indicate the message confirmed time.

CollateralPerOrder - The collateral that is deposited by the relayer for a transaction.

Basic Rules

After a user sends a cross-chain transaction, the fee market system calculates the penalty or reward according to the time the cross-chain transaction is confirmed, with the following rules:

The cross-chain transaction is confirmed before the last block of the n slot.

As long as the order is confirmed before the last block of the nth slot, we consider it to be delivered on time, and the calculation of rewards and penalties varies depending on when the message is confirmed.

Suppose the cross-chain message has n slots, the message is confirmed at the m-th slot, and Pm denotes the quote price of m-th slot. At this point, the assigned relayers from 0 to m slots will be penalized, and the penalty will be calculated as AssignedRelayerSlashRatio * CollateralPerOrder, while the assigned relayers from m to n slots will receive a reward for ensuring the message is completed on time (DutyRelayersRewardRatio * (fee - Pm)) / (n - m). Pm plus the penalties for the other assigned relayers mentioned above will be distributed as new rewards to the message delivery relayer and the message confirm relayer, where the message delivery relayer receive the MessageRelayersRewardRatio of this reward, the message confirm relayer gets the ConfirmRelayersRewardRatio of this reward. The rest of the fee will be given to treasury.

The cross-chain transaction is confirmed after the last block of the n slot.

We believe that this cross-chain transaction is severely delayed, in which case all assigned relayers will be heavily penalized by deducting the AssignedRelayerSlashRatio of the CollateralPerOrder and calculating an additional penalty amount based on the delay time. These penalty amounts, plus the cross-chain fees paid by users, will be distributed as new rewards to the message delivery relayer and the message confirm relayer, where the message delivery relayer receive the MessageRelayersRewardRatio of this reward, the message confirm relayer gets the ConfirmRelayersRewardRatio of this reward.

The following diagram shows how rewards are distributed:

shell
                          assigned offensive relayers collateral
                                        |                                        |---> messaage delivery relayer
                                        |                                        |
            |- slot price + slot offensive slash(may have) = message reward -->  |
            |                                                                    |
message fee -                                                                    |---> message confirm relayer 
            |                   ---> treasury
            |                   |
            |- message surplus -|
                                |
                                ---> slot duty rewards -> assigned duty relayers

An example

Assume that relayers R1, R2, R3, R4 and R5 have registered with the fee market and are all running relayer clients capable of delivering messages with quote prices of P1=10, P2=20, P3=30, P4=40 and P5=50 and are registered with a locked asset of 300.

Assume that the total number of assigned relayers specified by the fee market system is 3 (default). In this case, the fee market will generate a cross-chain fee of 30 (10 < 20 < 30 < 40 < 50) and the set of assigned relayers is R1, R2, R3.

Assume that the slot value is equal to 50 blocks and CollateralPerOrder is equal to 100 in the fee market runtime.

In this case, suppose the source chain receives a cross-chain message at height 100 and the user pays a cross-chain fee of 30. After the source chain receives the message, the fee market assigns R1, R2 and R3 as the assigned relayers for the message, respectively, and their corresponding time slots are (100, 150), (150, 200), (200, 250)

After that, all relayers clients will observe the message in the source chain and deliver it to the target chain first.

The slash, reward analysis is divided into two cases.

the message in time (confirmed before the end of the 3rd assigned relayer's slot)

Confirmed at block 110(the first slot)

No assigned relayers will be slashed in this case.

Reward Summary:

To assigned relayers (R1, R2, R3): (DutyRelayersRewardRatio * (30 - 10)) / 3 = 1
To treasury: 30 - 10 - 1 * 3 = 17
To message delivery relayer: 10 * MessageRelayersRewardRatio = 8
To message confirm relayer: 10 * ConfirmRelayersRewardRatio = 2

Confirmed at block 160(the second slot)

Since the message is confirmed at the second slot, the first assigned relayer will be slashed.

Slash Summary:

R1: 100 * AssignedRelayerSlashRatio = 20

Reward Summary:

To assigned relayers (R2, R3) = (DutyRelayersRewardRatio * (30 - 20)) / 2 = 1
To treasury: 30 - 20 - 1 * 2 = 8
To message delivery relayer: (20 + 20) * MessageRelayersRewardRatio = 32
To message confirm relayer: (20 + 20) * MessageRelayersRewardRatio = 8

Confirmed at block 210(the third slot)

Since the message is confirmed at the third slot, the first two assigned relayer will be slashed.

Slash Summary:

R1: 100 * AssignedRelayerSlashRatio = 20
R2: 100 * AssignedRelayerSlashRatio = 20

Reward Summary:

To assigned relayers (R3) = (DutyRelayersRewardRatio * (30 - 30)) / 1 = 0
To treasury: 30 - 30 - 0 = 0
To message delivery relayer: (10 + 20 * 2) * MessageRelayersRewardRatio = 56
To message confirm relayer: (10 + 20 * 2) * MessageRelayersRewardRatio = 14

the message times out (confirmed after the end of the 3rd assigned relayer's slot)

Confirmed at block 260(Out of slot)

The message is confirmed out of slot 10 blocks, all the assigned relayer will be slashed.

Slash Summary:

R1: 100 * AssignedRelayerSlashRatio + 10 * 2 = 40
R2: 100 * AssignedRelayerSlashRatio + 10 * 2 = 40
R3: 100 * AssignedRelayerSlashRatio + 10 * 2 = 40

Reward Summary:

To assigned relayers: 0
To treasury: 0
To message delivery relayer: (30 + 40 * 3) * MessageRelayersRewardRatio = 120
To message confirm relayer: (30 + 40 * 3) * MessageRelayersRewardRatio = 30

FeeMarket Protocol

Overview

Design Principles

Tiered Quotation Mechanism

Reward And Slash Rules

Key Parameters

Basic Rules

An example