The BMF: Burn-Maximizing Fee Mechanism

Unlike virtually all other blockchains in existence, the DeSo Blockchain's fees are maximally burned in order to maximize the network value that accrues to the DESO token, without compromising the transaction ordering properties of blockchain fees and without compromising validators' incentives to run nodes.

Although more sophisticated in practice, at a high level the BMF amounts to only paying the log of the fees to validators, while burning the rest. This means that if a fee is ~2x higher, it will only result in a linear increase in validator rewards. This results in higher fees still earning better placement in blocks, but without validators capturing the lion's share of the fees paid for block space priority. Thus a validator can expect to earn very little through transaction fees, as they should, with their operating model relying solely on a commission on delegated stake. Decoupling the fee revenue from validators' operating incentives in this way allows the network to pay validators the minimum required to operate the network while burning as close to 100% of the network revenue as possible. The full system is described in DeSo's open-source code here, and in the Revolution Proof of Stake Docs.

It is important to note, and perhaps surprising, that other blockchains do not optimize validator rewards and fee-burning in this way, even though fee-burning is the ultimate source of scarcity for blockchain networks in the long-term. For example, Ethereum's mechanism is highly-unoptimized, resulting in most of the fees going to "Miner-Extracted Value" or MEV, especially during times of high congestion (which is when most fees are earned). And Solana's mechanic is even less optimized, blindly burning 50% of fees without any serious attempt at optimization whatsoever.

In contrast, DeSo's fee-burning mechanism was designed in direct conjunction with its validator reward mechanics, from the ground up, in order to ensure that both the cost of operating the network in the long-term is minimized and that maximum fees are burned. Failure to think critically about both of these problems together could result in either validators being paid too little to operate nodes or insufficient fees being burned in the long-term. And changing it after-the-fact becomes very difficult due to validators pushing back on economic adjustments that impact them.