Please see CIP below open for discussion. Feel free to reach out if you have questions

Layer: Governance
Title: Cap Per-Transaction Application Rewards at $1.50
Author(s): W Eric Saraniecki
Type: Tokenomics
License: CC0-1.0

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.

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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:

1. 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.

2. Distorts behavior and creates artificial incentive loops
   Apps may optimize for reward farming rather than sustainable usage, increasing volatility and reducing predictability.

3. Breaks fee-to-reward proportionality
   In equilibrium, App Rewards should roughly track fee generation. Under the current configuration, rewards can exceed fees considerably.

Capping the per-transaction App Reward ensures that as the network grows, incentives scale responsibly and remain correlated to activity.

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Proposal

Introduce a $1.50 Cap on Per-Transaction App Rewards

• For every transaction executed by a Featured App, the maximum App Reward weight that can be earned is capped such that the reward value does not exceed $1.50.

• This cap applies per featured transaction

• Applies to all Featured App Rewards equally

This maintains a better correlation between fee generation and rewards:

• Under low traffic conditions, a $1.50 cap corresponds to ~50% positive expected value (PEV) on fee burn.

• Apps can still generate meaningful rewards, but never extract disproportionate value in low-load periods.

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Implementation Considerations

• Activation should be immediate upon CIP approval

• A future CIP will address what to do with Unclaimed Rewards 

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Conclusion

Capping App Rewards at $1.50 per transaction maintains reasonable reward maximums per transaction and ensures rewards scale responsibly as usage varies. This measure strengthens the economic sustainability of the Featured App reward system while preserving incentives for genuine adoption.