> For the complete documentation index, see [llms.txt](https://velocity-network.gitbook.io/velocity-network/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://velocity-network.gitbook.io/velocity-network/usdvlct-tokenomics/trust-ledger-utilization-fees.md).

# Trust Ledger Utilization Fees

### What is Trust Ledger Utilization

To verify a credential presented by the individual is trustworthy the relying party must call the on-chain trust ledger. 

Keys held in DID documents and stored on-chain in the trust ledger and used for verifying the identities of Issuers, Holders, and Subjects and the attestations made within a particular credential. 

### Design Objectives

The Velocity Network is designed to support long-term, enterprise-grade usage while allowing the $VLCT token to appreciate as network adoption and economic value grow.

The Trust Ledger Utilization Fee pricing model is therefore designed to satisfy four core objectives:

1. **Preserve $VLCT appreciation** as the network becomes more valuable.
2. **Prevent runaway verification fees** that would price out real users.
3. **Avoid fiat-pegged pricing**, so fees remain natively connected to the $VLCT economy.
4. **Remain predictable and contract-friendly** for enterprises.

To achieve this, Velocity uses a sub-linear, token-native fee model with strong dampening and no fixed fiat cap.

### Overview of the Model

The fiat value of a Trust Ledger Utilization Fee increases as:

* The **price of $VLCT increases**, and
* The **overall usage of the network increases**,

However, fee growth is **sub-linear**, meaning that increases in token price result in **progressively smaller increases in fiat cost per verification**.

Fees are not fixed in fiat terms, but are also **not allowed to scale linearly**, ensuring long-term usability.

#### Reference Values

At protocol relaunch or governance reset, the following reference values are defined:

* **Reference token price**\
  R<sub>0</sub>​: $VLCT price at the reference point (e.g. launch) = $0.10
* **Base** Trust Ledger Utilization Fee **PER CREDENTIAL**\
  F<sub>0</sub>​: fee in **$**&#x56;LCT **tokens** at R<sub>0</sub> = 5 $VLCT&#x20;
* **Base fiat cost:** C<sub>0</sub>=F<sub>0</sub>⋅R<sub>0</sub>

This establishes the economic starting point of the system.

#### Dynamic Variables

At any time t, the protocol observes:

* **Current $VLCT price**\
  R<sub>t</sub>​, computed using a time-weighted average price (TWAP)

The normalized growth ratio is then computed:

x=R<sub>t</sub>/R<sub>0</sub>(price growth)

#### Sub-Linear Fee Growth

This creates a **strongly dampened growth curve**, ensuring that fees increase gradually even under significant token appreciation.&#x20;

α∈(0,1): price dampening factor

Value default for Career Credentials:  α=0.4

#### **Identity Document Credentials (Special Category)**

Certain credential types, such as **identity documents (e.g., passports, government IDs)**, require **higher frequency usage and broader accessibility**.

To ensure these remain highly affordable and scalable, a **stronger dampening factor** is applied.

Value default for Identity Credentials:  α=0.1

This significantly slows fee growth, making identity verifications:

* More stable in fiat terms
* More suitable for high-volume, regulated use cases

#### Fiat Fee Calculation

The uncapped fiat cost of a verification is:

C<sub>t​</sub>=C<sub>0</sub>​⋅x<sup>α</sup>=0.50⋅x<sup>0.4 (or 0.1 for career credentials)</sup>

This means:

* Fees increase as $VLCT appreciates
* Growth slows over time due to sub-linear scaling
* No hard cap is imposed, but growth remains controlled

#### Token Amount Paid per Verification

The actual fee paid on-chain is denominated in **$VLCT**:

F<sub>t</sub>=C<sub>t</sub>/R<sub>t</sub>

As **$VELOCITY** appreciates:

* The **fiat cost per verification rises gradually**
* The **number of $**&#x56;LCT **tokens required per verification decreases**

This reflects the increasing value of each token, while maintaining stable economic behavior for users.

### Price Scenarios&#x20;

#### Career Credentials Price Scenarios

| $VLCT Price | Multiple | Fiat Fee | Tokens Paid |
| ----------- | -------- | -------- | ----------- |
| $0.10       | 1×       | $0.50    | 5.00        |
| $0.20       | 2×       | $0.66    | 3.29        |
| $0.50       | 5×       | $0.95    | 1.90        |
| $1.00       | 10×      | $1.26    | 1.26        |
| $2.00       | 20×      | $1.66    | 0.83        |
| $5.00       | 50×      | $2.39    | 0.48        |
| $10.00      | 100×     | $3.15    | 0.32        |
| $20.00      | 200×     | $4.16    | 0.21        |
| $50.00      | 500×     | $6.02    | 0.12        |
| $100.00     | 1000×    | $7.92    | 0.08        |

***

#### Identity Credentials Price Scenarios

| $VLCT Price | Multiple | Fiat Fee | Tokens Paid |
| ----------- | -------- | -------- | ----------- |
| $0.10       | 1×       | $0.50    | 5.00        |
| $0.20       | 2×       | $0.54    | 2.70        |
| $0.50       | 5×       | $0.59    | 1.18        |
| $1.00       | 10×      | $0.63    | 0.63        |
| $2.00       | 20×      | $0.67    | 0.34        |
| $5.00       | 50×      | $0.75    | 0.15        |
| $10.00      | 100×     | $0.79    | 0.08        |
| $20.00      | 200×     | $0.85    | 0.04        |
| $50.00      | 500×     | $0.93    | 0.02        |
| $100.00     | 1000×    | $1.00    | 0.01        |

***

#### How to read the table

**Standard credentials:**

* Start at **$0.50**
* Grow gradually to \~$3–$6 across large price increases
* Provide meaningful value capture as the network scales

**Identity credentials:**

* Also start at **$0.50**
* Grow very slowly
* Remain below \~$1 even under extreme token appreciation

#### Economic Interpretation

This dual-structure model ensures:

* **Standard credentials** capture increasing economic value as the network matures
* **Identity credentials** remain accessible and scalable for mass adoption use cases

Over time, value capture shifts from:

* “more tokens per transaction”

to:

* “higher transaction volume, broader adoption, and staking demand”

### Why This Is Not Fiat-Pegged

* Fees are dynamically derived from $VLCT price
* There is no fixed fiat pricing mechanism
* $VLCT remains the native unit of settlement

The system maintains a fully token-native pricing model, with controlled growth through dampening rather than external pegging.

### Summary

The Trust Ledger Utilization fee model:

* Uses sub-linear pricing with strong dampening (α = 0.4)
* Applies category-specific pricing (α = 0.1 for identity credentials)
* Avoids fiat pegs and hard caps
* Ensures long-term enterprise usability while preserving token value capture

Trust Ledger Utilization fees start at $0.50 and grow sub-linearly with token value, with stronger dampening for identity credentials, ensuring both enterprise affordability and long-term economic scalability without relying on fiat caps.