We recently introduced a new way to pay the Klever Blockchain fees on the Klever Wallet that has sparked curiosity and understanding among our users. At the heart of this update is the interaction between the native token KLV and Klever Digital Assets (KDAs) - tokens like KID, CHIPS, KUNAI, and others, created on the Klever Blockchain. But how does this innovation impact the KLV burning mechanism?
The KLV Burning Process
It’s important to emphasize that the KLV burning process remains the same and is crucial for the economy of KLV and maintaining a healthy network interoperability. Transaction fees, essential for operations on the network, are calculated in KLV. The news comes with the ability to pay these fees using KDAs, by creating pools between KLV and these tokens.
You can remember the details of KLV burning process here.
Explaining the Pool Mechanism
To pay transaction fees with KDAs, the token owner must create a specific KLV x KDA pool. This pool serves as a reserve of KLV that will be used to cover the fees for transactions carried out with the respective KDA.
For instance, you own the XYZ token and set up a KLV x XYZ pool with a 5:1 ratio (meaning 1 KLV equals 5 XYZ). A user wanting to carry out a transaction costing 3 KLV and choosing to pay with XYZ will need 15 XYZ. This amount is transferred from the user’s account to the pool, and the corresponding 3 KLV are withdrawn from the pool to complete the payment of the transaction on the Kleverchain.
Impact on KLV Burning
Introducing this fee system ensures that the KLV burning mechanism remains effective. Despite the option to pay fees with KDAs, KLV is the token that actually “settles” the transaction. This means the practice of burning 50% of the Bandwidth fee continues, helping to control KLV circulation and promoting its deflation.