Existential Deposit

TL;DR

An Existential Deposit is a minimum monetary amount required to keep an account open on a blockchain in the Polkadot ecosystem. An account with a balance lower than the Existential Deposit will be reaped and removed from the network to save blockspace and prevent spamming.

What is an Existential Deposit?

In the Polkadot ecosystem, an existential deposit is a minimum amount of DOT tokens that each account must possess.

If an account’s balance falls below this threshold and the account is not in active use (meaning it does not have any other “reserves” locking up tokens), the account is cleaned up by the network — all its funds are lost, and the account is termed as “reaped.” In other words, the account is removed from any future blocks on a given blockchain requiring an existential deposit.

As of the beginning of 2024, the existential deposit was 1 DOT, but it’s important to always verify from the official Polkadot network resources since such parameters may change over time.

Why do Existential Deposits exist?

The Polkadot ecosystem, like all blockchain networks, consists of numerous individual accounts. Each of these accounts occupies a certain amount of computational resources (memory and processing power) within the network, irrespective of their balance or activity level.

An “existential deposit” is a term in the Polkadot system that refers to the minimum amount of Polkadot’s native currency (DOT tokens) that must be kept in an account. Its main purpose is to prevent the misuse of the network’s resources.

Imagine if it was free to create an account and each account takes up a bit of memory in the network. Someone could potentially create millions of accounts, using up the network’s resources and slowing it down dramatically, a situation often described as a “spam attack.”

To protect against this, Polkadot implements the concept of existential deposits. When an account’s balance falls below this minimum threshold — and the account isn’t being actively used for anything else — the Polkadot network will remove or “reap” the account to free up resources, and any leftover balance is automatically lost.

Account Structures with Respect to Existential Deposits

In the Polkadot ecosystem, different chains and parachains can have their own existential deposits (EDs). The EDs are specified in their respective native tokens. However, details about EDs for each specific network may change over time, and therefore, it’s advisable to check the official documents or reach out to their community for the most accurate information.

Brief high level concepts to understand in the Polkadot Ecosystem:

Parachains: Think of parachains as specialized lanes on a superhighway, each designed for a specific type of traffic. In the Polkadot ecosystem, these lanes are individual blockchains tailored for unique tasks, running in parallel to achieve massive efficiency and scalability. They’re like specialized apps on your phone, each doing its own thing but capable of talking to each other, thanks to Polkadot’s interconnected ecosystem.

Relay Chain: The relay chain is the backbone of Polkadot’s superhighway, managing traffic, ensuring security, and letting all the lanes (parachains) communicate smoothly. It’s the core that holds everything together, focusing on processing transactions and maintaining consensus across the network without getting bogged down by the complexities of individual parachains.

Asset Hub: Imagine Asset Hub as a one-stop shop within the Polkadot mall where you can create, trade, and manage digital assets like cryptocurrencies and NFTs. Platforms like Asset Hub serve this purpose, offering a simplified, secure space for handling digital assets across various blockchains, all while leveraging Polkadot’s seamless connectivity and shared security.

Below is a high-level organization of some of the top chains and parachains with respect to ED:

1. Polkadot:

• Relay chain ED is 1 DOT.
• Polkadot Asset Hub (common-good parachain) has an ED of 0.01 DOT

2. Kusama:

• Relay chain ED is 1 KSM.
• Kusama Asset Hub has an ED of 0.000003333 KSM.

3. All Other Parachains:

• Independent parachains could optionally implement their own ED’s in their native token.
• As an example of a parachain: Karura, operating on Kusama, has a token KAR and an ED of 0.1 KAR.

How do Existential Deposits Work? *Skip If You Don’t Want To Know Technical Details*

1. Initialization: An Existential Deposit (ED) is a system parameter set during the initialization of a blockchain network.
2. Account Creation and Operation: An account is considered ‘active’ and created when it’s ‘free’ balance is first above ED. The ‘free’ balance represents liquid assets that can be transferred or used for fees, whereas ‘reserved’ funds are locked for a specific purpose (like staking or maintaining ED).
3. Balance Transfer Operations: The system executes balance transfers considering the ED constraints. One must reap their account to completely remove their balance entirely, including the ED.
4. Account Reaping: If an account’s ‘free’ balance falls below the ED, and there are no ‘reserved’ funds, a runtime module within the chain can set the account balance to zero. This operation is called ‘reaping’ the account.

What happens when you go below ED? Does it still exist somewhere?

When an account’s free balance goes below the Existential Deposit (ED) in the Polkadot ecosystem (and there are no other factors keeping the account alive, like a non-zero ‘reserved’ balance or open orders), the account gets reaped by the network for the purpose of optimizing the blockchain’s asset management. This process involves deleting the account from the network’s state storage and removing all its associated data.

The account technically no longer exists on-chain after being reaped. It can’t send or receive tokens, and its previous transaction history doesn’t get carried forward if a new account with the same public key is created afterwards. However, the historical data of the reaped account (including its transactions) are still visible in full nodes that keep the historical data.

Please note that, while the account is deleted and can’t transact, the private key associated with that account still exists off-chain, in whatever wallet or storage it was originally generated. This means that if the account was reaped due to falling below the ED, it can be “reactivated” again through a transaction process by simply sending enough tokens (at least the ED) to the public key corresponding to the private key held in the off-chain wallet.

What do you lose?

Upon the reaping of an account, various implications may arise based on the blockchain network’s guidelines and type of assets held by that account.

1. Existential Deposit Residual Balance: The ED amount doesn’t constitute a ‘fee’ that is claimed by anyone; rather, it’s a system mechanism for maintaining network cleanliness and efficiency. Hence, the ED itself isn’t ‘lost’ — when your account balance dips below this ED, your residual balance (if any) normally gets burned, and the account ceases to exist on-chain.

2. Crowdloans: Any pending crowdloan returns would potentially be lost. It could be a good practice to regularly maintain your account balance above ED in any anticipation of returned loans and interest.

3. Non-Fungible Tokens (NFTs): As per Polkadot’s current design, account reaping will not apply to the loss of NFT’s. In the case of an account balance below ED and or at 0, then the account may be reaped, but NFT’s will still be owned by the account.

What do you do after it’s reaped? How to reactivate?

If your account has been reaped due to its balance falling below the Existential Deposit (ED), it no longer exists on-chain upon the next epoch. However, the account can be effectively “reactivated” again simply by sending funds above the ED limit to the account. Keep in mind that the history and data from before the account was reaped do not carry over to this new “reactivated” account. Any tokens, NFTs, or other assets the account had before being reaped would be lost. Therefore, it’s important to maintain a balance above the ED to avoid an account being reaped.