ICX deflation via xcall

General Discussion
1

Hey everybody.

I read the lastest 2023 update which was focused alot on xcall. The thing i was wondering about is that fees are paid in the currency from the source chain. Then it mentioned the fees collected are used to buy ICX from the market and burned.

How will this be handled exactly via smart contract? Also will the buy back happen instantly as the transaction is sent or will it be scheduled based? For example once a month etc. Im curious to how this will work.

Cheers!

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2

Hey @AtomTanNZ great question!

There’s still no specific public details on the exact mechanism that will be used for the fee handling, but of course there has been a lot of discussion internally.

From a high level, one idea was to have an auction system in place that would auction off fees at a discount that could be bought with ICX - and then that ICX would be burned.

For example:

  • Transfers from Binance Smart Chain (source chain) would collect fees in BNB
  • Auction would occur on the ICON blockchain to purchase these BNB fees with ICX
  • People would bid on the collected BNB fees until the auction is complete, with the BNB likely being bought at a discount (for arbitrage)
  • “Bob” wins the auction and pays ICX on ICON, then claims their BNB on Binance Smart Chain
  • Bob’s ICX that was used to purchase the BNB is now burned

To answer your questions, with this mechanism:

  1. Yes, this would be handled via smart contracts and would likely use xCall as well
  2. The buyback of non-ICX fees wouldn’t be instantaneous as they would need to be auctioned off over a certain period of time
    *when ICON is the source chain, ICX is the fee that is charged - in which case the fee (ICX) would be burned instantaneously

With that being said, this method is not finalized but I wanted to give you a brief overview of how the fee handling + buyback could occur :+1:

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