Abstract
This CIP introduces a maximum per-transaction Application Reward (“App Reward”) of $1.50.
Today, App Rewards are uncapped, which creates outsized and asymmetric incentives during periods of low network activity. This proposal aligns rewards more closely with fee generation by ensuring that each App transaction can produce, at most, a 50% positive expected value relative to the fees it generates when the network is below Validator and Application equilibrium.
This change is a ledger configuration update—requiring no code changes—and can be activated immediately upon approval.
Motivation
The current uncapped App Reward model was appropriate during early-stage bootstrapping when network activity was low, Featured Apps were sparse, and incentives were supportive in attracting builders. However:
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Uncapped App Rewards create outsized returns under low load
When network activity dips, elastic flows or small amounts of user activity can generate very large App Rewards that are disconnected from the actual economic value delivered. -
Distorts behavior and creates artificial incentive loops
Apps may optimize for reward farming rather than sustainable usage, increasing volatility and reducing predictability. -
Breaks fee-to-reward proportionality
In equilibrium, App Rewards should roughly track fee generation. Under the current configuration, rewards can exceed fees considerably.
