Any network participant will be able to convert ZNN to xZNN and use it inside the extension chain through a bridge-like system.
The feeless property is maintained at the base layer and if you want to use the extension chain, you must obey its rules.
We can use the decentralized bridge @sumamu built and tweak it to support this type of wrapping. It would be a little bit different from wrapping ZNN to wZNN and unwrapping it later because xZNN will actually be consumed/burnt in the extension chain, so it won’t be a 1:1 backing.
Fusing QSR and/or generating PoW enables the feeless property (via Plasma), not ZNN. ZNN is staked to produce QSR and adding another utility to it (converting it to xZNN that can be used as gas in an extension chain), will only increase its value.
On the contrary, xZNN will be associated with the gas concept for the extension chain.
Since there won’t be any inflation, the extension chain will only have a fee distribution mechanism:
- 33% distributed to builders (contract deployers)
- 33% distributed to extension chain validators
- 34% burned (similar to ETH)