$XRD is the native cryptocurrency and utility token of the Radix network. It exists as a monetary asset, with its primary utility being to pay transaction fees, secure the network via staking, and participate in the ecosystem’s various governance mechanisms.
The naming of $XRD follows international rules ISO 4217 and ISO 3166, which prescribe that commodities and currencies not backed by nations begin with X and national country codes may not begin with an X, respectively.
$XRD has two primary purposes within the Radix ecosystem:
$XRD is a key component of Radix's Delegated Proof of Stake (DPoS) system, which utilizes $XRD to secure the network against potential attacks like Sybil attacks. In the DPoS system, $XRD holders can "stake" or delegate their tokens to validator nodes they wish to support. The top 100 validator nodes with the highest amount of staked $XRD are selected to participate in ordering transactions and achieving consensus. Stakers are incentivized to participate by earning a portion of the newly minted $XRD from network emission rewards. The upcoming Xi’an network upgrade will remove the limit of 100 validators.
All transactions on the Radix network require a fee paid in $XRD. The transaction fees are intended to prevent spam transactions by imposing a small economic cost. Notably, 50% of the base network fee portion of each transaction is permanently burned and removed from circulation. This deflationary pressure is aimed at controlling $XRD supply over time.
Transaction fees on Radix are calculated based on the following components:
The total fee is the sum of the network's assessed CostUnits portion converted to $XRD, plus royalties, multiplied by any tip multipliers.
Fees can be paid from any wallet/vault containing $XRD, not just the transaction signer's wallet. Transactions can have fees covered by multiple parties "chipping in" portions.
Fee Distribution
Of the base network fee portion (excluding royalties), 50% is permanently burned, 25% goes to the validator leader for that round, and 25% is distributed among all validators at epoch boundaries based on participation.
Any royalty fees get paid out to the developer's specified vault. Tip fees go directly to the validator leader for that round.
Keeping Fees Stable
To keep fees relatively stable in fiat terms, the network can adjust the fiat value multiplier used for fee calculations if the $XRD/USD price deviates significantly based on a policy.
As the base currency of Radix, $XRD can potentially be used in various ways within the Radix DeFi ecosystem, such as: