Variable Existential Deposit

[Note: I'm lazy and this issue post was drafted by an AI to introduce the concept for discussion.]

Concept

We propose a new approach to Polkadot's Existential Deposit (ED) system: a Variable Existential Deposit. This system aims to lower the entry barrier for new users while maintaining protection against state bloat.

The core idea is to replace the current fixed ED with a dynamic system where:

1. New accounts start with a very low (or zero) ED.
2. The required ED increases over time for inactive accounts.
3. Accounts that remain active (through transactions, fees paid, or staking) maintain a low ED requirement.

Example Implementation

Here's a simplified example of how this system might work:

graph TD
    A[New Account: 0 DOT] -->|1 week inactive| B[0.1 DOT]
    B -->|1 month inactive| C[0.5 DOT]
    C -->|6 months inactive| D[1 DOT]
    D -->|1 year inactive| E[2 DOT]
    A -->|Active: Fees > Threshold| F[Remains at 0 DOT]
    B -->|Active: Fees > Threshold| F
    C -->|Active: Fees > Threshold| F
    D -->|Active: Fees > Threshold| F
    E -->|Active: Fees > Threshold| F

In this example:

• New accounts start with 0 DOT ED.
• The ED increases gradually for inactive accounts.
• Accounts that meet an activity threshold (e.g., paying a certain amount in fees or maintaining a stake) keep their ED at 0.

Potential Implementation

1. Track account activity (e.g., sum of fees paid) over defined periods (e.g., weekly or per era).
2. Use Substrate's scheduler to periodically check account activity.
3. Adjust ED requirements based on activity levels.
4. Implement a maximum ED cap to protect long-term holders.
5. Special accounts (like those used by pallets) would not be affected, as they are already kept alive by increasing the providers reference count.

Benefits

1. Lower entry barrier for new users.
2. Encourages network participation and account maintenance.
3. Provides a self-cleaning mechanism for truly abandoned accounts.
4. Maintains protection against state bloat.
5. More flexible than the current fixed ED system.

Considerations

• Performance impact of tracking account activity over time
• Balancing the activity threshold to encourage participation without being overly burdensome
• Impact on long-term holders and stakers
• User experience and notifications for increasing ED
• Governance implications and parameter adjustments

Next Steps

This issue aims to introduce the concept for initial discussion. If well-received, a more detailed RFC will follow, including specific parameters, implementation details, and analysis of potential network impacts.

We welcome feedback, questions, and suggestions from the Polkadot fellowship community.