Mainnet 3.0 Update — TFUEL Burning and Transaction Fee Increase

This article was first published on Stories by Theta Labs on Medium

Mainnet 3.0 Update — TFUEL Burning and Transaction Fee Increase

As we march towards a June 30 release of Mainnet 3.0, a key protocol extension is the introduction of TFUEL burning where Elite Edge Nodes will burn at least 25% of each TFUEL payment to the network. In addition to this, network transaction fees and smart contract fees are also burned taking these TFUEL perpetually out of circulation.

In order to better align value with the transaction volume on Theta blockchain, a moderate increase in the gas fee on Theta protocol is necessary. Currently, the fees on Theta network are near zero, and after the proposed increase would still be sufficiently low and cost effective for smart contracts and Dapps. The table below shows the estimated fees based on today’s TFUEL price for Theta before and after the update, along with Ethereum for comparison:

While Theta transaction fees increase, they are still 90% to 95% lower than the current fees on Ethereum, making Theta more affordable to transact and build smart contracts. This increase in fees will more closely align token utility value with usage of the Theta blockchain. As more smart contracts are more deployed on Theta including video platform rewards and micropayments, NFTs, DeFi and other Dapps, significantly more TFUEL will now be burned by usage of Theta blockchain.

As reference, today’s Theta network processes approximately 100,000 transactions per day with less than 4% being NFT mint and buy-sell transfer interactions via smart contracts. With our planned growth for the ThetaDrop NFT marketplace, licensing of our platform to third-parties and other expansion plans, we forecast that NFT interactions with Theta smart contracts alone will reach 600,000 transactions per day, at which point nearly 250M TFUEL will be burned per year, cancelling out the majority of annual TFUEL inflation.

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