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| 1 | +--- |
| 2 | +title: "Payment Model" |
| 3 | +--- |
| 4 | + |
| 5 | +Lit Protocol uses a token-based payment system to ensure the decentralized network can sustain itself and compensate node operators for providing cryptographic services. |
| 6 | + |
| 7 | +## How Payment Works |
| 8 | + |
| 9 | +### Token Deposit System |
| 10 | + |
| 11 | +To use Lit Protocol's services, you must first load tokens into the **Ledger Contract** on Lit Chain. This contract acts as a prepaid account that holds your $LITKEY tokens and automatically deducts fees as you use the network. |
| 12 | + |
| 13 | +### Dynamic Pricing Model |
| 14 | + |
| 15 | +Lit Protocol uses a dynamic pricing model that adjusts based on network usage: |
| 16 | + |
| 17 | +- **Base Price**: The minimum price for each service when the network has low usage |
| 18 | +- **Max Price**: The maximum price when the network is at full capacity |
| 19 | +- **Current Price**: The actual price at any given moment, which fluctuates between the base and max price based on current network usage |
| 20 | + |
| 21 | +This pricing mechanism ensures: |
| 22 | +- Fair pricing during low-usage periods (you pay less when demand is low) |
| 23 | +- Network stability during high-usage periods (prices increase to manage demand) |
| 24 | +- Sustainable compensation for node operators |
| 25 | + |
| 26 | +### Pricing in $LITKEY Tokens |
| 27 | + |
| 28 | +All services on Lit Protocol are priced in **$LITKEY tokens**, the native token of Lit Chain. When you use network services such as: |
| 29 | + |
| 30 | +- **PKP Signing**: Generating signatures with your Programmable Key Pair |
| 31 | +- **Encrypted Signing**: Signing with encrypted keys |
| 32 | +- **Lit Actions**: Executing serverless JavaScript functions |
| 33 | +- **Sign Session Key**: Session-based signing operations |
| 34 | + |
| 35 | +The network automatically deducts the appropriate amount of $LITKEY tokens from your ledger balance based on the current dynamic price. |
| 36 | + |
| 37 | +### Automatic Deduction |
| 38 | + |
| 39 | +When you make a request to the network, the system: |
| 40 | +1. Checks your ledger balance |
| 41 | +2. Calculates the current price for the requested service |
| 42 | +3. Deducts the required tokens from your balance |
| 43 | +4. Processes your request |
| 44 | + |
| 45 | +If your balance is insufficient, the request will fail. You can check your balance and deposit more tokens as needed using the [Payment Manager](/sdk/getting-started/payment-manager-setup). |
| 46 | + |
| 47 | +## Getting Started |
| 48 | + |
| 49 | +To start using Lit Protocol's paid services: |
| 50 | + |
| 51 | +1. **Acquire $LITKEY tokens** - Get tokens from exchanges or other sources |
| 52 | +2. **Set up Payment Manager** - Configure your payment system using the [Payment Manager Setup Guide](/sdk/getting-started/payment-manager-setup) |
| 53 | +3. **Deposit tokens** - Load tokens into the ledger contract |
| 54 | +4. **Use the network** - Start making requests; tokens will be deducted automatically |
| 55 | + |
| 56 | +For detailed information on current pricing, see the [Current Prices](/learning-lit/pricing/current-prices) page. |
| 57 | + |
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