Chain + CEX Coin = Burning? Unveiling OKB's On-chain Logic

Recently, OKX's official coin, OKB, has once again become super hot due to a series of updates related to its X Layer. In a short period after the news release, OKB's price surged fourfold, indicating its popularity.

Amidst the heated discussion, have you ever wondered: why does X Layer, as an L2, use OKB instead of ETH for Gas? Since users pay OKB as transaction fees every day, will the total supply of OKB decrease as a result? Let's delve into the underlying logic of OKB and X Layer in this article.

What is Gas

From a first-principles perspective, the essence of Gas is the pricing of scarce resources. Every time a user sends a transaction on-chain, they are essentially "renting" a small piece of limited block space. The more complex the transaction and the more contract calls, the higher the Gas value consumed. The transaction fee ultimately paid by the user is actually the result of a "block space auction."

On Ethereum, the implementation of the EIP-1559 standard changed how users pay transaction fees. Now, the cost of each transaction is split into two parts:

• Base fee: This is a base fee automatically set by the system, which everyone must pay. The difference is that this money does not go into the miners' pockets but is directly burned by the protocol.
• Tip: This is a small tip that users can choose to pay additionally, with the aim of making validators more willing to prioritize their transactions. If you are in a hurry, pay more; if not, pay very little.

From the user's perspective, the changes brought by EIP-1559 are mainly two-fold:

1. You no longer need to guess prices blindly. The system will tell you the current Base fee, and as long as you add the tip you are willing to give, you can ensure your transaction is included.
2. Of the transaction fees you pay, only the tip goes to the validators; the remaining base fee is directly burned.

So, when you send a transaction on-chain, you actually know that a portion of this gas "disappears directly," and another portion "goes into the validator's pocket." This is the core logic of how EIP-1559 changes the user experience. Other Layer 1s also have similar mechanisms; for example, transactions on the BNB Chain also lead to the burning of a portion of BNB fees.

X Layer's Gas Mechanism: Consumption Does Not Equal Burning

First, X Layer is different from BNB Chain: BNB Chain is a Layer 1, while X Layer is a Layer 2. So why doesn't X Layer continue to use ETH as gas, like Arbitrum or Optimism? The reason is that it adopted Polygon's Agglayer CDK framework. This framework provides developers with more flexible choices, allowing any token to be set as gas on newly built Layer 2s, not just ETH. X Layer leveraged this to introduce OKB into its transaction fee system.

So, what is the user's transaction process on X Layer? From a common perspective, it can be broken down into several steps:

• User submits transaction;
• Wait for the sequencer to order the transaction;
• The sequencer bundles multiple transactions and sends them to the Ethereum mainnet;
• Transactions are verified on the mainnet;
• Transaction completed.

Therefore, users on X Layer will first pay transaction fees to the sequencer. At the same time, the sequencer is not just a role that receives money without incurring costs, because it is the bridge to communicate with the Ethereum mainnet. Transaction data on the mainnet will occupy block space resources, so the sequencer naturally needs to pay a certain fee.

However, when operations are performed and fees are paid on the Ethereum mainnet, the required token is Ethereum's native token, not OKB. Therefore, the mainnet's burning mechanism does not involve the burning of OKB, and the total supply of OKB will remain unchanged after a recent historical repurchase announcement.

X Layer and OKB's Mutual Reinforcement

Although the total supply of OKB will remain unchanged, X Layer transactions will drive the circulation and transfer of OKB, which will still have many impacts.

For example, most current sequencers are centralized, meaning the public chain project team acts as the sequencer themselves, which is also one of the core business models of public chains today. So, you can imagine that as transaction activity on X Layer continuously increases, the project team will accumulate more and more OKB.

You can even directly see the sequencer's income on the X Layer block explorer. The image below shows the state change of a transaction on X Layer. Besides your balance changing, you can see that the block producer's (sequencer's) balance has also increased. This is where the transaction fees circulate. We can check this address's balance to track the activity and income on X Layer. Of course, this is only its income, not profit; the actual profit must subtract the costs incurred by the sequencer.

End

The X Layer case illustrates a simple but often overlooked fact: Gas consumption does not equal deflation. The key lies in the ultimate destination of transaction fees in the underlying design. For CEX coins like OKB, understanding their fee mechanism and deflation/inflation logic is not just a technical detail but one of the most important prerequisites for investment decisions.

Disclaimer: This content is for educational purposes only, explaining and analyzing OKB and X Layer, and does not involve any investment advice or financial advice regarding OKB. Crypto assets and related protocols carry high market and technical risks, and price and value logic may fluctuate drastically. Investors should fully understand the risks, evaluate them themselves, and make decisions carefully.