ICON unveils New Transaction Fee System ‘Fee 2.0’

ICON Foundation
Hello ICON World
Published in
5 min readJul 15, 2019


Greetings ICONists,

‘Fee 2.0’, the new transaction fee system of the ICON Network, has been published on the ICON Mainnet. Users can now access ICON DApp services more conveniently without paying transaction fees.

Previously, all DApp users were required to pay cryptocurrency fees starting from their initial uses of services. That meant that DApps could only be used by those holding a certain amount of cryptocurrency, and therefore presented a challenge in the sense that customers had to solely bear the burden of creating a wallet and buying cryptocurrency.

In order to solve this issue, ICON has designed the Fee 2.0 system in order to resolve this inconvenience and dramatically reduce the fees incurred in using and operating DApps. Fee 2.0 consists of two main components: ‘Fee Sharing’ and ‘Virtual Step’.

The Fee Sharing feature enables DApp service operators to have the choice to pay transaction fees on behalf of the service users. The Virtual Step feature enables DApp service operators to pay fees with the ‘Virtual Steps’ generated through an ICX staking process.

By using Fee 2.0 features (Fee Sharing and Virtual Step), the burden that transaction fees impose for both ICON DApp service users and operators are significantly reduced. Details of each feature are laid out in more detail down below.

Fee Sharing

Fee Sharing is a feature that enables DApp service operators to have the choice to pay transaction fees on behalf of the service users. This gives users access to ICON DApp services without any transaction fees.

In terms of User Experience (UX), the burden of creating wallets and purchasing cryptocurrencies to pay fees has been a major hurdle for those who want to use DApps. DApp operators have also often faced difficulties in attracting more users into their services and expanding due to such factors. The lack of improvements in user experience has often been pointed to as the biggest hurdle for mass adoption of DApps.

As a response, ICON created the Fee Sharing function in order to allow the service operators, not the users, to pay the transaction fees as is done in the web application market. This greatly improves user convenience by allowing DApp operators who create ‘SCORE (Smart Contract on Reliable Environment)’ to pay the transaction fees incurred in using the services. With Fee Sharing, users can use blockchain services without paying fees, and DApp operators will be able to expand their business free from the existing hurdles mentioned above.

Virtual Step

ICON is also implementing Virtual Step in line with Fee Sharing in order to reduce the burden of DApp operators who need to pay fees on behalf of the service users. The Virtual Step feature enables DApp service operators to pay fees with the ‘Virtual Steps’ generated through an ICX staking process instead of actual ICX.

While Fee Sharing allows users to use the services for free, DApp operators will face a higher fee as the usage frequency of their SCOREs increases. Excessive fees could affect the stability of service operations and thereby presenting another hurdle for the DApp operators.

ICON has designed Virtual Step as a means of reasonably offsetting the fee burden on DApp operators. If DApp operators deposit ICX to their own SCOREs for a certain period of time, this deposit action will generate Virtual Steps that can be used to pay transaction fees. Virtual Step is generated every month in proportion with the quantity of ICX deposited and the duration of the deposit period. The deposit period ranges from a minimum of 1 month to a maximum of 24 months, and the deposit amount ranges from a minimum of 5,000 ICX to a maximum of 100,000 ICX.

* Currently, only 1 month long deposits are available, but long-term deposits will become available in the future.
* When a DAPP operator deposits ICX for a month, Virtual Steps equivalent to 8% of the deposit amount will be created.
ex) Deposited 10,000 ICX for a month → receive 10,000*0.08*100,000,000 = 80,000,000,000 Virtual Steps (1 ICX = 100,000,000 Steps)
ex) Deposited 10,000 ICX and signed for 6 months, receive 10,000*0.1009*100,000,000 = 100,900,000,000 per month for 6 months

> Virtual Step Calculation

> Virtual Step Calculation Ratio according to ICX Deposit Period (Monthly)

* Virtual Steps can only be used to pay transaction fees and does not hold any transaction value in the market.
* Every Virtual Step has an expiration period of one month from the date of creation.
* DApp operators will face a penalty in ICX if they withdraw the deposited ICX prior to the predetermined period. The penalty is equivalent to the sum of Virtual Steps used during the given contract period.

By paying fees with Virtual Step, DApp operators will be able to save DApp operating costs and operate in a more reliable manner.
>> Check out ‘How to Use Fee 2.0’

ICON is a DApp-friendly blockchain, providing a wide range of support in order to help developers create convenient and innovative DApps in an optimal environment.

After P-Reps are elected in the 3Q through the ongoing <ICONSENSUS: P-Rep Election Campaign>, ICON DApps will be able to benefit directly from ‘DApp Booster Programs (DBP)’. DApps on the network will receive a portion of the block rewards based on their ranking. ICON DApps can also benefit indirectly from ‘Ecosystem Expansion Project (EEP)’, in which any ICONists will be incentivized to contribute to network development through open source activities and other contributory acts. DApp support will also come in forms such as the ‘ICON TX CHALLENGE: ICON’s Got Talent’, etc.. Implementation of Fee 2.0 is a part of the effort to create a supportive environment for DApps and more will follow suit, so be sure to keep an eye on the ever-developing ICON DApp ecosystem!

Thank you,

Hyperconnect the World


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