Core Concepts
Fee Collection in Sovereign Neutron
Following the Mercury upgrade in April 2025, Neutron operates as a fully sovereign network with its own validator set and native NTRN staking. Transaction fees collected on Neutron are processed entirely within the network through the Fee Burner module. The Fee Burner module processes fees at the end of each block from a designated module account.Deflationary Mechanism
The primary function of the Fee Burner is to implement a deflationary tokenomics model through:- Systematic Burning: By destroying NTRN tokens collected as fees, the module reduces the total supply over time
- Supply Contraction: As usage of the network increases, more fees are collected and burned, creating stronger deflationary pressure
Treasury Funding
For fees collected in non-NTRN denominations (such as IBC tokens), the module:- Identifies all non-NTRN tokens in the designated module account
- Transfers these tokens to the Treasury address specified in the module parameters
- Enables ecosystem funding without creating additional NTRN tokens
Architecture
Implementation Details
End Block Execution
The Fee Burner module’s core functionality executes at the end of every block through theEndBlock
handler. During this process:
- The module accesses the designated module account
- Retrieves all token balances from this account
- Processes each token denomination according to the module’s rules
NTRN Token Burning
When the module encounters NTRN tokens (identified by theneutron_denom
parameter):
- The tokens are burned using the SDK’s
BurnCoins
function - The burned amount is added to the running total of burned tokens
- The updated total is stored in the module’s state
Non-NTRN Token Handling
For all other token denominations:- The module aggregates them into a single collection
- Retrieves the Treasury address from the module parameters
- Transfers the entire collection to the Treasury address
State Management
The module maintains minimal state information:- Module Parameters: Configuration settings for the module operation
- Total Burned Amount: A running record of all NTRN tokens burned since genesis
Economic Implications
The Fee Burner module plays a crucial role in Neutron’s sovereign economic model:- Supply Control: By continuously reducing the circulating supply of NTRN, the module helps maintain token value
- Usage-Based Deflation: The more the network is used, the more tokens are burned, creating a positive feedback loop
- Ecosystem Sustainability: Non-NTRN fees provide funding for ecosystem development without diluting token value
- Fixed Supply Preservation: Supports Neutron’s fixed supply tokenomics introduced with the Mercury upgrade