feat(x/rewards): Add fee burn (#422)

* burn 🔥 * chore CHANGELOG.md * pr review * add adr --------- Signed-off-by: Frojdi Dymylja <[email protected]>
archway-network · Jul 27, 2023 · 6abd9cc · 6abd9cc
1 parent 535d0eb
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diff --git a/CHANGELOG.md b/CHANGELOG.md
@@ -32,6 +32,7 @@ Contains all the PRs that improved the code without changing the behaviours.
 
 ### Added
 
+- [#422](https://github.com/archway-network/archway/pull/422/) - Add fee burning of tx fees not distributed to contracts.
 - [#419](https://github.com/archway-network/archway/pull/419) - Easily run localnet via make
 - [#421](https://github.com/archway-network/archway/pull/421) - Add archwayd darwin binaries
 

diff --git a/app/ante.go b/app/ante.go
@@ -22,8 +22,9 @@ import (
 type HandlerOptions struct {
 	ante.HandlerOptions
 
-	IBCKeeper  *ibckeeper.Keeper
-	WasmConfig *wasmTypes.WasmConfig
+	IBCKeeper             *ibckeeper.Keeper
+	WasmConfig            *wasmTypes.WasmConfig
+	RewardsAnteBankKeeper rewardsAnte.BankKeeper
 
 	TXCounterStoreKey sdk.StoreKey
 
@@ -76,7 +77,7 @@ func NewAnteHandler(options HandlerOptions) (sdk.AnteHandler, error) {
 		// Custom Archway interceptor to track new transactions
 		trackingAnte.NewTxGasTrackingDecorator(options.TrackingKeeper),
 		// Custom Archway fee deduction, which splits fees between x/rewards and x/auth fee collector
-		rewardsAnte.NewDeductFeeDecorator(options.Codec, options.AccountKeeper, options.BankKeeper, options.FeegrantKeeper, options.RewardsKeeper),
+		rewardsAnte.NewDeductFeeDecorator(options.Codec, options.AccountKeeper, options.RewardsAnteBankKeeper, options.FeegrantKeeper, options.RewardsKeeper),
 		// SetPubKeyDecorator must be called before all signature verification decorators
 		ante.NewSetPubKeyDecorator(options.AccountKeeper),
 		ante.NewValidateSigCountDecorator(options.AccountKeeper),

diff --git a/app/app.go b/app/app.go
@@ -225,7 +225,7 @@ var (
 	// module account permissions
 	maccPerms = map[string][]string{
 		rewardsTypes.ContractRewardCollector: nil,
-		authtypes.FeeCollectorName:           nil,
+		authtypes.FeeCollectorName:           {authtypes.Burner},
 		distrtypes.ModuleName:                nil,
 		minttypes.ModuleName:                 {authtypes.Minter},
 		stakingtypes.BondedPoolName:          {authtypes.Burner, authtypes.Staking},
@@ -799,11 +799,12 @@ func NewArchwayApp(
 				SignModeHandler: encodingConfig.TxConfig.SignModeHandler(),
 				SigGasConsumer:  ante.DefaultSigVerificationGasConsumer,
 			},
-			IBCKeeper:         app.IBCKeeper,
-			WasmConfig:        &wasmConfig,
-			TXCounterStoreKey: keys[wasm.StoreKey],
-			TrackingKeeper:    app.TrackingKeeper,
-			RewardsKeeper:     app.RewardsKeeper,
+			IBCKeeper:             app.IBCKeeper,
+			WasmConfig:            &wasmConfig,
+			RewardsAnteBankKeeper: app.BankKeeper,
+			TXCounterStoreKey:     keys[wasm.StoreKey],
+			TrackingKeeper:        app.TrackingKeeper,
+			RewardsKeeper:         app.RewardsKeeper,
 		},
 	)
 	if err != nil {

diff --git a/docs/adr/ADR-007-fee-burning.md b/docs/adr/ADR-007-fee-burning.md
@@ -0,0 +1,32 @@
+# ADR-007 – Introduction of fee burning
+
+Date: 2023-07-27
+
+## Status
+
+Implemented
+
+## Context
+
+To better accommodate inflationary rewards increases within the Archway protocol, we are introducing transaction (TX)
+fee burning. This strategy permits us to offer more inflationary rewards to contracts safely, while simultaneously
+incinerating the TX fees which were previously distributed to validators and stakers.
+
+## Decision
+
+We plan to modify the Fee Deduction ante handler to burn the fees formerly allocated to validators and stakers. This 
+change involves extending the behavior of the FeeDeduction ante handler. Currently, the FeeDeduction ante handler
+dispatches the TX fees (which are not dedicated to contracts) to the fee collector module address. 
+This address then becomes a rewards pool for staking rewards, managed by the Distribution module. Our new approach is to
+burn these funds as soon as the FeeDeduction handler sends them to the fee collector.
+
+## Consequences
+
+### Positive
+a) This change enables a safe increase of inflationary rewards for contracts, mitigating the risk of potential spam attacks and economic imbalances.
+b) It establishes a transparent performance metric for Archway. The more fees burnt, the more value is generated for the protocol.
+
+### Negative
+
+a) Validators and stakers will experience a decrease in their rewards.
+b) TX consume slightly more gas (12000gas more approximately), as they will need to pay for the gas used to burn the fees.
diff --git a/e2e/txfees_test.go b/e2e/txfees_test.go
@@ -20,7 +20,7 @@ import (
 // Test configures a chain based on the Archway mainnet parameters.
 func (s *E2ETestSuite) TestTxFees() {
 	const (
-		txGasLimit        = 201_000
+		txGasLimit        = 212_000
 		txFeeAmtIncrement = 1000
 	)
 

diff --git a/x/rewards/ante/fee_deduction.go b/x/rewards/ante/fee_deduction.go
@@ -15,20 +15,25 @@ import (
 
 var _ sdk.AnteDecorator = DeductFeeDecorator{}
 
+type BankKeeper interface {
+	authTypes.BankKeeper
+	BurnCoins(ctx sdk.Context, moduleName string, amt sdk.Coins) error
+}
+
 // DeductFeeDecorator deducts fees from the first signer of the tx.
 // If the first signer does not have the funds to pay for the fees, return with InsufficientFunds error.
 // Call next AnteHandler if fees successfully deducted.
 // CONTRACT: Tx must implement FeeTx interface to use DeductFeeDecorator.
 type DeductFeeDecorator struct {
 	codec          codec.BinaryCodec
 	ak             ante.AccountKeeper
-	bankKeeper     authTypes.BankKeeper
+	bankKeeper     BankKeeper
 	feegrantKeeper ante.FeegrantKeeper
 	rewardsKeeper  RewardsKeeperExpected
 }
 
 // NewDeductFeeDecorator returns a new DeductFeeDecorator instance.
-func NewDeductFeeDecorator(codec codec.BinaryCodec, ak ante.AccountKeeper, bk authTypes.BankKeeper, fk ante.FeegrantKeeper, rk RewardsKeeperExpected) DeductFeeDecorator {
+func NewDeductFeeDecorator(codec codec.BinaryCodec, ak ante.AccountKeeper, bk BankKeeper, fk ante.FeegrantKeeper, rk RewardsKeeperExpected) DeductFeeDecorator {
 	return DeductFeeDecorator{
 		codec:          codec,
 		ak:             ak,
@@ -138,6 +143,10 @@ func (dfd DeductFeeDecorator) deductFees(ctx sdk.Context, tx sdk.Tx, acc authTyp
 		if err := dfd.bankKeeper.SendCoinsFromAccountToModule(ctx, acc.GetAddress(), authTypes.FeeCollectorName, authFees); err != nil {
 			return sdkErrors.Wrapf(sdkErrors.ErrInsufficientFunds, err.Error())
 		}
+		// burn the auth fees.
+		if err := dfd.bankKeeper.BurnCoins(ctx, authTypes.FeeCollectorName, authFees); err != nil {
+			return sdkErrors.Wrapf(sdkErrors.ErrInsufficientFunds, err.Error())
+		}
 	}
 
 	if !rewardsFees.Empty() {

diff --git a/x/rewards/ante/fee_deduction_test.go b/x/rewards/ante/fee_deduction_test.go
@@ -54,7 +54,7 @@ func TestRewardsFeeDeductionAnteHandler(t *testing.T) {
 				mockWasmExecuteMsg,
 			},
 			rewardRecordExpected:            true,
-			feeCollectorBalanceDiffExpected: "500stake",
+			feeCollectorBalanceDiffExpected: "0stake", // fees are burnt
 			rewardsBalanceDiffExpected:      "500stake",
 		},
 		{
@@ -66,7 +66,7 @@ func TestRewardsFeeDeductionAnteHandler(t *testing.T) {
 				mockWasmExecuteMsg,
 			},
 			rewardRecordExpected:            true,
-			feeCollectorBalanceDiffExpected: "900stake,450uarch",
+			feeCollectorBalanceDiffExpected: "0stake,0uarch", // fees are burnt
 			rewardsBalanceDiffExpected:      "100stake,50uarch",
 		},
 		{