diff --git a/src/lib_shell/bench/helpers/block.ml b/src/lib_shell/bench/helpers/block.ml
index f176a2778..6cee50468 100644
--- a/src/lib_shell/bench/helpers/block.ml
+++ b/src/lib_shell/bench/helpers/block.ml
@@ -302,7 +302,7 @@ let genesis
     ?(tokens_per_roll = Constants_repr.default.tokens_per_roll)
     ?(michelson_maximum_type_size = Constants_repr.default.michelson_maximum_type_size)
     ?(seed_nonce_revelation_tip = Constants_repr.default.seed_nonce_revelation_tip)
-    ?(origination_burn = Constants_repr.default.origination_burn)
+    ?(origination_size = Constants_repr.default.origination_size)
     ?(block_security_deposit = Constants_repr.default.block_security_deposit)
     ?(endorsement_security_deposit = Constants_repr.default.endorsement_security_deposit)
     ?(block_reward = Constants_repr.default.block_reward)
@@ -324,7 +324,7 @@ let genesis
     tokens_per_roll ;
     michelson_maximum_type_size ;
     seed_nonce_revelation_tip ;
-    origination_burn ;
+    origination_size ;
     block_security_deposit ;
     endorsement_security_deposit ;
     block_reward ;
diff --git a/src/lib_shell/bench/helpers/block.mli b/src/lib_shell/bench/helpers/block.mli
index 987d843ea..1ab691015 100644
--- a/src/lib_shell/bench/helpers/block.mli
+++ b/src/lib_shell/bench/helpers/block.mli
@@ -110,7 +110,7 @@ val genesis:
   ?tokens_per_roll:Tez_repr.tez ->
   ?michelson_maximum_type_size:int ->
   ?seed_nonce_revelation_tip:Tez_repr.tez ->
-  ?origination_burn:Tez_repr.tez ->
+  ?origination_size:int ->
   ?block_security_deposit:Tez_repr.tez ->
   ?endorsement_security_deposit:Tez_repr.tez ->
   ?block_reward:Tez_repr.tez ->
diff --git a/src/proto_alpha/lib_client/injection.ml b/src/proto_alpha/lib_client/injection.ml
index a421c6eaa..be524811a 100644
--- a/src/proto_alpha/lib_client/injection.ml
+++ b/src/proto_alpha/lib_client/injection.ml
@@ -141,13 +141,19 @@ let rec estimated_gas :
 
 let estimated_storage_single
     (type kind)
+    origination_size
     (Manager_operation_result { operation_result ;
                                 internal_operation_results }
      : kind Kind.manager contents_result) =
   let storage_size_diff (type kind) (result : kind manager_operation_result) =
     match result with
-    | Applied (Transaction_result { paid_storage_size_diff }) -> Ok paid_storage_size_diff
-    | Applied (Origination_result { paid_storage_size_diff }) -> Ok paid_storage_size_diff
+    | Applied (Transaction_result { paid_storage_size_diff ; allocated_destination_contract }) ->
+        if allocated_destination_contract then
+          Ok (Z.add paid_storage_size_diff origination_size)
+        else
+          Ok paid_storage_size_diff
+    | Applied (Origination_result { paid_storage_size_diff }) ->
+        Ok (Z.add paid_storage_size_diff origination_size)
     | Applied Reveal_result -> Ok Z.zero
     | Applied Delegation_result -> Ok Z.zero
     | Skipped _ -> assert false
@@ -161,13 +167,13 @@ let estimated_storage_single
        Ok (Z.add acc storage))
     (storage_size_diff operation_result) internal_operation_results
 
-let estimated_storage res =
+let estimated_storage origination_size res =
   let rec estimated_storage :
     type kind. kind Kind.manager contents_result_list -> _ =
     function
-    | Single_result res -> estimated_storage_single res
+    | Single_result res -> estimated_storage_single origination_size res
     | Cons_result (res, rest) ->
-        estimated_storage_single res >>? fun storage1 ->
+        estimated_storage_single origination_size res >>? fun storage1 ->
         estimated_storage rest >>? fun storage2 ->
         Ok (Z.add storage1 storage2) in
   estimated_storage res >>? fun diff ->
@@ -254,6 +260,7 @@ let may_patch_limits
     (chain, block) >>=? fun { parametric = {
       hard_gas_limit_per_operation = gas_limit ;
       hard_storage_limit_per_operation = storage_limit ;
+      origination_size ;
     } } ->
   let may_need_patching_single
     : type kind. kind contents -> kind contents option = function
@@ -309,7 +316,7 @@ let may_patch_limits
         end >>=? fun gas_limit ->
         begin
           if c.storage_limit < Z.zero || storage_limit <= c.storage_limit then
-            Lwt.return (estimated_storage_single result) >>=? fun storage ->
+            Lwt.return (estimated_storage_single (Z.of_int origination_size) result) >>=? fun storage ->
             begin
               if Z.equal storage Z.zero then
                 cctxt#message "Estimated storage: no bytes added" >>= fun () ->
diff --git a/src/proto_alpha/lib_protocol/src/alpha_context.mli b/src/proto_alpha/lib_protocol/src/alpha_context.mli
index 4544148b2..f18be37ef 100644
--- a/src/proto_alpha/lib_protocol/src/alpha_context.mli
+++ b/src/proto_alpha/lib_protocol/src/alpha_context.mli
@@ -372,7 +372,7 @@ module Constants : sig
     tokens_per_roll: Tez.t ;
     michelson_maximum_type_size: int;
     seed_nonce_revelation_tip: Tez.t ;
-    origination_burn: Tez.t ;
+    origination_size: int ;
     block_security_deposit: Tez.t ;
     endorsement_security_deposit: Tez.t ;
     block_reward: Tez.t ;
@@ -399,7 +399,7 @@ module Constants : sig
   val block_reward: context -> Tez.t
   val endorsement_reward: context -> Tez.t
   val seed_nonce_revelation_tip: context -> Tez.t
-  val origination_burn: context -> Tez.t
+  val origination_size: context -> int
   val block_security_deposit: context -> Tez.t
   val endorsement_security_deposit: context -> Tez.t
 
@@ -950,7 +950,7 @@ val manager_kind: 'kind manager_operation -> 'kind Kind.manager
 module Fees : sig
 
   val origination_burn:
-    context -> payer:Contract.t -> (context * Tez.t) tzresult Lwt.t
+    context -> (context * Tez.t) tzresult Lwt.t
 
   val record_paid_storage_space:
     context -> Contract.t -> (context * Z.t * Z.t * Tez.t) tzresult Lwt.t
diff --git a/src/proto_alpha/lib_protocol/src/apply.ml b/src/proto_alpha/lib_protocol/src/apply.ml
index 59d20937b..4b60879ec 100644
--- a/src/proto_alpha/lib_protocol/src/apply.ml
+++ b/src/proto_alpha/lib_protocol/src/apply.ml
@@ -374,14 +374,14 @@ let apply_manager_operation_content :
     | Transaction { amount ; parameters ; destination } -> begin
         spend ctxt source amount >>=? fun ctxt ->
         begin match Contract.is_implicit destination with
-          | None -> return (ctxt, [])
+          | None -> return (ctxt, [], false)
           | Some _ ->
               Contract.allocated ctxt destination >>=? function
-              | true -> return (ctxt, [])
+              | true -> return (ctxt, [], false)
               | false ->
-                  Fees.origination_burn ctxt ~payer >>=? fun (ctxt, orignation_burn) ->
-                  return (ctxt, [ Delegate.Contract payer, Delegate.Debited orignation_burn ])
-        end >>=? fun (ctxt, maybe_burn_balance_update) ->
+                  Fees.origination_burn ctxt >>=? fun (ctxt, origination_burn) ->
+                  return (ctxt, [ Delegate.Contract payer, Delegate.Debited origination_burn ], true)
+        end >>=? fun (ctxt, maybe_burn_balance_update, allocated_destination_contract) ->
         Contract.credit ctxt destination amount >>=? fun ctxt ->
         Contract.get_script ctxt destination >>=? fun (ctxt, script) ->
         match script with
@@ -414,6 +414,7 @@ let apply_manager_operation_content :
                   consumed_gas = Gas.consumed ~since:before_operation ~until:ctxt ;
                   storage_size = Z.zero ;
                   paid_storage_size_diff = Z.zero ;
+                  allocated_destination_contract ;
                 } in
             return (ctxt, result, [])
         | Some script ->
@@ -451,7 +452,8 @@ let apply_manager_operation_content :
                   originated_contracts ;
                   consumed_gas = Gas.consumed ~since:before_operation ~until:ctxt ;
                   storage_size = new_size ;
-                  paid_storage_size_diff } in
+                  paid_storage_size_diff ;
+                  allocated_destination_contract } in
             return (ctxt, result, operations)
       end
     | Origination { manager ; delegate ; script ; preorigination ;
@@ -482,14 +484,14 @@ let apply_manager_operation_content :
           ~manager ~delegate ~balance:credit
           ?script
           ~spendable ~delegatable >>=? fun ctxt ->
-        Fees.origination_burn ctxt ~payer >>=? fun (ctxt, orignation_burn) ->
+        Fees.origination_burn ctxt >>=? fun (ctxt, origination_burn) ->
         Fees.record_paid_storage_space ctxt contract >>=? fun (ctxt, size, paid_storage_size_diff, fees) ->
-        Lwt.return Tez.(orignation_burn +? fees) >>=? fun all_fees ->
         let result =
           Origination_result
             { balance_updates =
                 Delegate.cleanup_balance_updates
-                  [ Contract payer, Debited all_fees ;
+                  [ Contract payer, Debited fees ;
+                    Contract payer, Debited origination_burn ;
                     Contract source, Debited credit ;
                     Contract contract, Credited credit ] ;
               originated_contracts = [ contract ] ;
diff --git a/src/proto_alpha/lib_protocol/src/apply_results.ml b/src/proto_alpha/lib_protocol/src/apply_results.ml
index d716dc81b..3961608ab 100644
--- a/src/proto_alpha/lib_protocol/src/apply_results.ml
+++ b/src/proto_alpha/lib_protocol/src/apply_results.ml
@@ -51,6 +51,7 @@ type _ successful_manager_operation_result =
         consumed_gas : Z.t ;
         storage_size : Z.t ;
         paid_storage_size_diff : Z.t ;
+        allocated_destination_contract : bool ;
       } -> Kind.transaction successful_manager_operation_result
   | Origination_result :
       { balance_updates : Delegate.balance_updates ;
@@ -164,14 +165,15 @@ module Manager_result = struct
     make
       ~op_case: Operation.Encoding.Manager_operations.transaction_case
       ~encoding:
-        (obj7
+        (obj8
            (opt "storage" Script.expr_encoding)
            (opt "big_map_diff" Contract.big_map_diff_encoding)
            (dft "balance_updates" Delegate.balance_updates_encoding [])
            (dft "originated_contracts" (list Contract.encoding) [])
            (dft "consumed_gas" z Z.zero)
            (dft "storage_size" z Z.zero)
-           (dft "paid_storage_size_diff" z Z.zero))
+           (dft "paid_storage_size_diff" z Z.zero)
+           (dft "allocated_destination_contract" bool false))
       ~iselect:
         (function
           | Internal_operation_result
@@ -188,17 +190,21 @@ module Manager_result = struct
           | Transaction_result
               { storage ; big_map_diff ; balance_updates ;
                 originated_contracts ; consumed_gas ;
-                storage_size ; paid_storage_size_diff } ->
+                storage_size ; paid_storage_size_diff ;
+                allocated_destination_contract } ->
               (storage, big_map_diff, balance_updates,
                originated_contracts, consumed_gas,
-               storage_size, paid_storage_size_diff))
+               storage_size, paid_storage_size_diff,
+               allocated_destination_contract))
       ~inj:
         (fun (storage, big_map_diff, balance_updates,
               originated_contracts, consumed_gas,
-              storage_size, paid_storage_size_diff) ->
+              storage_size, paid_storage_size_diff,
+              allocated_destination_contract) ->
           Transaction_result { storage ; big_map_diff ; balance_updates ;
                                originated_contracts ; consumed_gas ;
-                               storage_size ; paid_storage_size_diff })
+                               storage_size ; paid_storage_size_diff ;
+                               allocated_destination_contract })
 
   let origination_case =
     make
diff --git a/src/proto_alpha/lib_protocol/src/apply_results.mli b/src/proto_alpha/lib_protocol/src/apply_results.mli
index 6bedb396f..fbe5186b9 100644
--- a/src/proto_alpha/lib_protocol/src/apply_results.mli
+++ b/src/proto_alpha/lib_protocol/src/apply_results.mli
@@ -95,6 +95,7 @@ and _ successful_manager_operation_result =
         consumed_gas : Z.t ;
         storage_size : Z.t ;
         paid_storage_size_diff : Z.t ;
+        allocated_destination_contract : bool ;
       } -> Kind.transaction successful_manager_operation_result
   | Origination_result :
       { balance_updates : Delegate.balance_updates ;
diff --git a/src/proto_alpha/lib_protocol/src/constants_repr.ml b/src/proto_alpha/lib_protocol/src/constants_repr.ml
index e583c80ec..3f8cfe734 100644
--- a/src/proto_alpha/lib_protocol/src/constants_repr.ml
+++ b/src/proto_alpha/lib_protocol/src/constants_repr.ml
@@ -87,7 +87,7 @@ type parametric = {
   tokens_per_roll: Tez_repr.t ;
   michelson_maximum_type_size: int;
   seed_nonce_revelation_tip: Tez_repr.t ;
-  origination_burn: Tez_repr.t ;
+  origination_size: int ;
   block_security_deposit: Tez_repr.t ;
   endorsement_security_deposit: Tez_repr.t ;
   block_reward: Tez_repr.t ;
@@ -117,7 +117,7 @@ let default = {
     | Ok c -> c
     | Error _ -> assert false
   end ;
-  origination_burn = Tez_repr.of_mutez_exn 257_000L ;
+  origination_size = 257 ;
   block_security_deposit = Tez_repr.(mul_exn one 512) ;
   endorsement_security_deposit = Tez_repr.(mul_exn one 64) ;
   block_reward = Tez_repr.(mul_exn one 16) ;
@@ -145,7 +145,7 @@ let parametric_encoding =
           c.tokens_per_roll,
           c.michelson_maximum_type_size,
           c.seed_nonce_revelation_tip,
-          c.origination_burn,
+          c.origination_size,
           c.block_security_deposit,
           c.endorsement_security_deposit,
           c.block_reward),
@@ -165,7 +165,7 @@ let parametric_encoding =
             tokens_per_roll,
             michelson_maximum_type_size,
             seed_nonce_revelation_tip,
-            origination_burn,
+            origination_size,
             block_security_deposit,
             endorsement_security_deposit,
             block_reward),
@@ -185,7 +185,7 @@ let parametric_encoding =
         tokens_per_roll ;
         michelson_maximum_type_size ;
         seed_nonce_revelation_tip ;
-        origination_burn ;
+        origination_size ;
         block_security_deposit ;
         endorsement_security_deposit ;
         block_reward ;
@@ -210,7 +210,7 @@ let parametric_encoding =
              (req "tokens_per_roll" Tez_repr.encoding)
              (req "michelson_maximum_type_size" uint16)
              (req "seed_nonce_revelation_tip" Tez_repr.encoding)
-             (req "origination_burn" Tez_repr.encoding)
+             (req "origination_size" int31)
              (req "block_security_deposit" Tez_repr.encoding)
              (req "endorsement_security_deposit" Tez_repr.encoding)
              (req "block_reward" Tez_repr.encoding))
diff --git a/src/proto_alpha/lib_protocol/src/constants_storage.ml b/src/proto_alpha/lib_protocol/src/constants_storage.ml
index d4d9b7f83..9613853fe 100644
--- a/src/proto_alpha/lib_protocol/src/constants_storage.ml
+++ b/src/proto_alpha/lib_protocol/src/constants_storage.ml
@@ -68,9 +68,9 @@ let michelson_maximum_type_size c =
 let seed_nonce_revelation_tip c =
   let constants = Raw_context.constants c in
   constants.seed_nonce_revelation_tip
-let origination_burn c =
+let origination_size c =
   let constants = Raw_context.constants c in
-  constants.origination_burn
+  constants.origination_size
 let block_security_deposit c =
   let constants = Raw_context.constants c in
   constants.block_security_deposit
diff --git a/src/proto_alpha/lib_protocol/src/fees_storage.ml b/src/proto_alpha/lib_protocol/src/fees_storage.ml
index 92f71aebe..e713d96f1 100644
--- a/src/proto_alpha/lib_protocol/src/fees_storage.ml
+++ b/src/proto_alpha/lib_protocol/src/fees_storage.ml
@@ -58,10 +58,14 @@ let () =
     (function Storage_limit_too_high -> Some () | _ -> None)
     (fun () -> Storage_limit_too_high)
 
-let origination_burn c ~payer =
-  let origination_burn = Constants_storage.origination_burn c in
-  Contract_storage.spend_from_script c payer origination_burn >>=? fun c ->
-  return (c, origination_burn)
+let origination_burn c =
+  let origination_size = Constants_storage.origination_size c in
+  let cost_per_byte = Constants_storage.cost_per_byte c in
+  (* the origination burn, measured in bytes *)
+  Lwt.return
+    Tez_repr.(cost_per_byte *? (Int64.of_int origination_size)) >>=? fun to_be_paid ->
+  return (Raw_context.update_allocated_contracts_count c,
+          to_be_paid)
 
 let record_paid_storage_space c contract =
   Contract_storage.used_storage_space c contract >>=? fun size ->
@@ -72,13 +76,19 @@ let record_paid_storage_space c contract =
   return (c, size, to_be_paid, to_burn)
 
 let burn_storage_fees c ~storage_limit ~payer =
-  let c, storage_space_to_pay = Raw_context.clear_storage_space_to_pay c in
-  let remaining = Z.sub storage_limit storage_space_to_pay in
+  let origination_size = Constants_storage.origination_size c in
+  let c, storage_space_to_pay, allocated_contracts =
+    Raw_context.clear_storage_space_to_pay c in
+  let storage_space_for_allocated_contracts =
+    Z.mul (Z.of_int allocated_contracts) (Z.of_int origination_size) in
+  let consumed =
+    Z.add storage_space_to_pay storage_space_for_allocated_contracts in
+  let remaining = Z.sub storage_limit consumed in
   if Compare.Z.(remaining < Z.zero) then
     fail Operation_quota_exceeded
   else
     let cost_per_byte = Constants_storage.cost_per_byte c in
-    Lwt.return (Tez_repr.(cost_per_byte *? (Z.to_int64 storage_space_to_pay))) >>=? fun to_burn ->
+    Lwt.return (Tez_repr.(cost_per_byte *? (Z.to_int64 consumed))) >>=? fun to_burn ->
     (* Burning the fees... *)
     if Tez_repr.(to_burn = Tez_repr.zero) then
       (* If the payer was was deleted by transfering all its balance, and no space was used,
diff --git a/src/proto_alpha/lib_protocol/src/fees_storage.mli b/src/proto_alpha/lib_protocol/src/fees_storage.mli
index a9132f551..f46f7df87 100644
--- a/src/proto_alpha/lib_protocol/src/fees_storage.mli
+++ b/src/proto_alpha/lib_protocol/src/fees_storage.mli
@@ -27,8 +27,9 @@ type error += Cannot_pay_storage_fee (* `Temporary *)
 type error += Operation_quota_exceeded (* `Temporary *)
 type error += Storage_limit_too_high (* `Permanent *)
 
+(** Does not burn, only adds the burn to storage space to be paid *)
 val origination_burn:
-  Raw_context.t -> payer:Contract_repr.t -> (Raw_context.t * Tez_repr.t) tzresult Lwt.t
+  Raw_context.t -> (Raw_context.t * Tez_repr.t) tzresult Lwt.t
 
 (** The returned Tez quantity is for logging purpose only *)
 val record_paid_storage_space:
diff --git a/src/proto_alpha/lib_protocol/src/parameters_repr.ml b/src/proto_alpha/lib_protocol/src/parameters_repr.ml
index c5b73558a..78d46ca45 100644
--- a/src/proto_alpha/lib_protocol/src/parameters_repr.ml
+++ b/src/proto_alpha/lib_protocol/src/parameters_repr.ml
@@ -135,9 +135,9 @@ let constants_encoding =
        and seed_nonce_revelation_tip =
          opt Tez_repr.(=)
            default.seed_nonce_revelation_tip c.seed_nonce_revelation_tip
-       and origination_burn =
-         opt Tez_repr.(=)
-           default.origination_burn c.origination_burn
+       and origination_size =
+         opt Compare.Int.(=)
+           default.origination_size c.origination_size
        and block_security_deposit =
          opt Tez_repr.(=)
            default.block_security_deposit c.block_security_deposit
@@ -170,7 +170,7 @@ let constants_encoding =
           tokens_per_roll,
           michelson_maximum_type_size,
           seed_nonce_revelation_tip,
-          origination_burn,
+          origination_size,
           block_security_deposit,
           endorsement_security_deposit,
           block_reward),
@@ -190,7 +190,7 @@ let constants_encoding =
             tokens_per_roll,
             michelson_maximum_type_size,
             seed_nonce_revelation_tip,
-            origination_burn,
+            origination_size,
             block_security_deposit,
             endorsement_security_deposit,
             block_reward),
@@ -226,8 +226,8 @@ let constants_encoding =
           unopt default.michelson_maximum_type_size michelson_maximum_type_size ;
         seed_nonce_revelation_tip =
           unopt default.seed_nonce_revelation_tip seed_nonce_revelation_tip ;
-        origination_burn =
-          unopt default.origination_burn origination_burn ;
+        origination_size =
+          unopt default.origination_size origination_size ;
         block_security_deposit =
           unopt default.block_security_deposit block_security_deposit ;
         endorsement_security_deposit =
@@ -258,7 +258,7 @@ let constants_encoding =
              (opt "tokens_per_roll" Tez_repr.encoding)
              (opt "michelson_maximum_type_size" uint16)
              (opt "seed_nonce_revelation_tip" Tez_repr.encoding)
-             (opt "origination_burn" Tez_repr.encoding)
+             (opt "origination_size" int31)
              (opt "block_security_deposit" Tez_repr.encoding)
              (opt "endorsement_security_deposit" Tez_repr.encoding)
              (opt "block_reward" Tez_repr.encoding))
diff --git a/src/proto_alpha/lib_protocol/src/raw_context.ml b/src/proto_alpha/lib_protocol/src/raw_context.ml
index a28afedab..5730188ea 100644
--- a/src/proto_alpha/lib_protocol/src/raw_context.ml
+++ b/src/proto_alpha/lib_protocol/src/raw_context.ml
@@ -40,6 +40,7 @@ type t = {
   block_gas: Z.t ;
   operation_gas: Gas_limit_repr.t ;
   storage_space_to_pay: Z.t option ;
+  allocated_contracts: int option ;
   origination_nonce: Contract_repr.origination_nonce option ;
   internal_nonce: int ;
   internal_nonces_used: Int_set.t ;
@@ -203,7 +204,7 @@ let init_storage_space_to_pay ctxt =
   | Some _ ->
       assert false
   | None ->
-      { ctxt with storage_space_to_pay = Some Z.zero }
+      { ctxt with storage_space_to_pay = Some Z.zero ; allocated_contracts = Some 0 }
 
 let update_storage_space_to_pay ctxt n =
   match ctxt.storage_space_to_pay with
@@ -212,12 +213,22 @@ let update_storage_space_to_pay ctxt n =
   | Some storage_space_to_pay ->
       { ctxt with storage_space_to_pay = Some (Z.add n storage_space_to_pay) }
 
-let clear_storage_space_to_pay ctxt =
-  match ctxt.storage_space_to_pay with
+let update_allocated_contracts_count ctxt =
+  match ctxt.allocated_contracts with
   | None ->
       assert false
-  | Some storage_space_to_pay ->
-      { ctxt with storage_space_to_pay = None }, storage_space_to_pay
+  | Some allocated_contracts ->
+      { ctxt with allocated_contracts = Some (succ allocated_contracts) }
+
+let clear_storage_space_to_pay ctxt =
+  match ctxt.storage_space_to_pay, ctxt.allocated_contracts with
+  | None, _ | _, None ->
+      assert false
+  | Some storage_space_to_pay, Some allocated_contracts ->
+      { ctxt with storage_space_to_pay = None ;
+                  allocated_contracts = None},
+      storage_space_to_pay,
+      allocated_contracts
 
 type storage_error =
   | Incompatible_protocol_version of string
@@ -442,6 +453,7 @@ let prepare ~level ~timestamp ~fitness ctxt =
     deposits = Signature.Public_key_hash.Map.empty ;
     operation_gas = Unaccounted ;
     storage_space_to_pay = None ;
+    allocated_contracts = None ;
     block_gas = constants.Constants_repr.hard_gas_limit_per_block ;
     origination_nonce = None ;
     internal_nonce = 0 ;
@@ -502,6 +514,7 @@ let register_resolvers enc resolve =
       fitness = 0L ;
       allowed_endorsements = Signature.Public_key_hash.Map.empty ;
       storage_space_to_pay = None ;
+      allocated_contracts = None ;
       fees = Tez_repr.zero ;
       rewards = Tez_repr.zero ;
       deposits = Signature.Public_key_hash.Map.empty ;
diff --git a/src/proto_alpha/lib_protocol/src/raw_context.mli b/src/proto_alpha/lib_protocol/src/raw_context.mli
index 55c3bee21..10ce3fa66 100644
--- a/src/proto_alpha/lib_protocol/src/raw_context.mli
+++ b/src/proto_alpha/lib_protocol/src/raw_context.mli
@@ -119,7 +119,8 @@ val block_gas_level: t -> Z.t
 
 val init_storage_space_to_pay: t -> t
 val update_storage_space_to_pay: t -> Z.t -> t
-val clear_storage_space_to_pay: t -> t * Z.t
+val update_allocated_contracts_count: t -> t
+val clear_storage_space_to_pay: t -> t * Z.t * int
 
 type error += Undefined_operation_nonce (* `Permanent *)
 
diff --git a/src/proto_alpha/lib_protocol/test/combined_operations.ml b/src/proto_alpha/lib_protocol/test/combined_operations.ml
index caeee39aa..1d088d0f3 100644
--- a/src/proto_alpha/lib_protocol/test/combined_operations.ml
+++ b/src/proto_alpha/lib_protocol/test/combined_operations.ml
@@ -70,7 +70,7 @@ let multiple_origination_and_delegation () =
   Context.init 2 >>=? fun (blk, contracts) ->
   let c1 = List.nth contracts 0 in
   let n = 10 in
-  Context.get_constants (B blk) >>=? fun { parametric = { origination_burn } } ->
+  Context.get_constants (B blk) >>=? fun { parametric = { origination_size ; cost_per_byte } } ->
   Context.Contract.pkh c1 >>=? fun delegate_pkh ->
 
   let new_accounts = List.map (fun _ -> Account.new_account ()) (1 -- n) in
@@ -111,6 +111,7 @@ let multiple_origination_and_delegation () =
       ) tickets in
 
   (* Previous balance - (Credit (n * 10tz) + Origination cost (n tz)) *)
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   Tez.(origination_burn *? (Int64.of_int n)) >>?= fun origination_total_cost ->
   Tez.((Tez.of_int (10 * n)) +? origination_total_cost) >>?= fun total_cost ->
   Assert.balance_was_debited ~loc:__LOC__
diff --git a/src/proto_alpha/lib_protocol/test/delegation.ml b/src/proto_alpha/lib_protocol/test/delegation.ml
index bd073d22a..500610c2a 100644
--- a/src/proto_alpha/lib_protocol/test/delegation.ml
+++ b/src/proto_alpha/lib_protocol/test/delegation.ml
@@ -150,7 +150,8 @@ let delegate_to_bootstrap_by_origination ~fee () =
   Context.Contract.balance (I i) bootstrap >>=? fun balance ->
   (* originate a contract with bootstrap's manager as delegate *)
   Op.origination ~fee ~credit:Tez.zero ~delegate:manager.pkh (I i) bootstrap >>=? fun (op, orig_contract) ->
-  Context.get_constants (I i) >>=? fun { parametric = { origination_burn ; _ }} -> (* 0.257tz *)
+  Context.get_constants (I i) >>=? fun { parametric = { origination_size ; cost_per_byte ; _ }} -> (* 0.257tz *)
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   Lwt.return (Tez.(+?) fee origination_burn) >>=? fun total_fee ->
   if fee > balance then
     begin
@@ -258,7 +259,7 @@ let tests_bootstrap_contracts = [
   Test.tztest "bootstrap keys are already registered as delegate keys (max fee)" `Quick (bootstrap_manager_already_registered_delegate ~fee:Tez.max_tez) ;
   Test.tztest "bootstrap manager can be delegate (init origination, small fee)" `Quick (delegate_to_bootstrap_by_origination ~fee:Tez.one_mutez) ;
   (* balance enough for fee but not for fee + origination burn *)
-  Test.tztest "bootstrap manager can be delegate (init origination, edge case)" `Quick (delegate_to_bootstrap_by_origination ~fee:(Tez.of_mutez_exn 3_999_999_750_000L)) ;
+  Test.tztest "bootstrap manager can be delegate (init origination, edge case)" `Quick (delegate_to_bootstrap_by_origination ~fee:(Tez.of_mutez_exn 3_999_999_743_000L)) ;
   (* fee bigger than bootstrap's initial balance*)
   Test.tztest "bootstrap manager can be delegate (init origination, large fee)" `Quick (delegate_to_bootstrap_by_origination ~fee:(Tez.of_int 10_000_000)) ;
   Test.tztest "bootstrap manager can be delegate (init delegation, small fee)" `Quick (delegate_to_bootstrap_by_delegation ~fee:Tez.one_mutez) ;
@@ -337,7 +338,8 @@ let unregistered_delegate_key_init_origination ~fee () =
   let unregistered_pkh = Account.(unregistered_account.pkh) in
   (* origination with delegate argument *)
   Op.origination ~fee ~delegate:unregistered_pkh (I i) bootstrap >>=? fun (op, orig_contract) ->
-  Context.get_constants (I i) >>=? fun { parametric = { origination_burn ; _ }} ->
+  Context.get_constants (I i) >>=? fun { parametric = { origination_size ; cost_per_byte ; _ }} ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   Lwt.return (Tez.(+?) fee origination_burn) >>=? fun _total_fee -> (* FIXME unused variable *)
   Context.Contract.balance (I i) bootstrap >>=? fun balance ->
   if fee > balance then
@@ -1062,7 +1064,8 @@ let registered_self_delegate_key_init_origination () =
   Op.delegation (I i) contract (Some pkh) >>=? fun op ->
   Incremental.add_operation i op >>=? fun i ->
   Context.Contract.balance (I i) contract >>=? fun balance ->
-  Context.get_constants (I i) >>=? fun { parametric = { origination_burn ; _ }} ->
+  Context.get_constants (I i) >>=? fun { parametric = { origination_size ; cost_per_byte ; _ }} ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   (* origination with delegate argument *)
   Op.origination ~delegate:pkh ~credit:Tez.one (I i) contract >>=? fun (op, orig_contract) ->
   Tez.(origination_burn +? Tez.one) >>?= fun total_cost ->
diff --git a/src/proto_alpha/lib_protocol/test/helpers/block.ml b/src/proto_alpha/lib_protocol/test/helpers/block.ml
index 86e398335..41cde873e 100644
--- a/src/proto_alpha/lib_protocol/test/helpers/block.ml
+++ b/src/proto_alpha/lib_protocol/test/helpers/block.ml
@@ -245,7 +245,7 @@ let genesis
     ?(tokens_per_roll = Constants_repr.default.tokens_per_roll)
     ?(michelson_maximum_type_size = Constants_repr.default.michelson_maximum_type_size)
     ?(seed_nonce_revelation_tip = Constants_repr.default.seed_nonce_revelation_tip)
-    ?(origination_burn = Constants_repr.default.origination_burn)
+    ?(origination_size = Constants_repr.default.origination_size)
     ?(block_security_deposit = Constants_repr.default.block_security_deposit)
     ?(endorsement_security_deposit = Constants_repr.default.endorsement_security_deposit)
     ?(block_reward = Constants_repr.default.block_reward)
@@ -288,7 +288,7 @@ let genesis
     tokens_per_roll ;
     michelson_maximum_type_size ;
     seed_nonce_revelation_tip ;
-    origination_burn ;
+    origination_size ;
     block_security_deposit ;
     endorsement_security_deposit ;
     block_reward ;
diff --git a/src/proto_alpha/lib_protocol/test/helpers/block.mli b/src/proto_alpha/lib_protocol/test/helpers/block.mli
index 3ab110b06..28b10a8db 100644
--- a/src/proto_alpha/lib_protocol/test/helpers/block.mli
+++ b/src/proto_alpha/lib_protocol/test/helpers/block.mli
@@ -103,7 +103,7 @@ val genesis:
   ?tokens_per_roll:Tez_repr.tez ->
   ?michelson_maximum_type_size:int ->
   ?seed_nonce_revelation_tip:Tez_repr.tez ->
-  ?origination_burn:Tez_repr.tez ->
+  ?origination_size:int ->
   ?block_security_deposit:Tez_repr.tez ->
   ?endorsement_security_deposit:Tez_repr.tez ->
   ?block_reward:Tez_repr.tez ->
diff --git a/src/proto_alpha/lib_protocol/test/helpers/test.ml b/src/proto_alpha/lib_protocol/test/helpers/test.ml
index 48762297e..dbd4b9967 100644
--- a/src/proto_alpha/lib_protocol/test/helpers/test.ml
+++ b/src/proto_alpha/lib_protocol/test/helpers/test.ml
@@ -30,6 +30,6 @@ let tztest name speed f =
     | Ok () -> Lwt.return_unit
     | Error err ->
         Tezos_stdlib_unix.Logging_unix.close () >>= fun () ->
-        Format.printf "WWW %a@." pp_print_error err ;
+        Format.printf "@.%a@." pp_print_error err ;
         Lwt.fail Alcotest.Test_error
   end
diff --git a/src/proto_alpha/lib_protocol/test/origination.ml b/src/proto_alpha/lib_protocol/test/origination.ml
index b6f71ada9..57cdf7fd5 100644
--- a/src/proto_alpha/lib_protocol/test/origination.ml
+++ b/src/proto_alpha/lib_protocol/test/origination.ml
@@ -43,8 +43,10 @@ let register_origination ?(fee=Tez.zero) ?(credit=Tez.zero) ?spendable ?delegata
   >>=? fun (operation, originated) ->
   Block.bake ~operation b >>=? fun b ->
   (* fee + credit + block security deposit were debited from source *)
-  Context.get_constants (B b) >>=? fun {parametric = {origination_burn ;
-                                                      block_security_deposit}} ->
+  Context.get_constants (B b) >>=? fun {parametric = { origination_size ;
+                                                       cost_per_byte ;
+                                                       block_security_deposit }} ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   Lwt.return (
     Tez.(+?) credit block_security_deposit >>?
     Tez.(+?) fee >>?
@@ -78,10 +80,12 @@ let test_origination_balances ~loc ?(fee=Tez.zero) ?(credit=Tez.zero)
      tests.*)
   Context.get_constants (B b) >>=? fun
     { parametric =
-        { origination_burn ;
+        { origination_size ;
+          cost_per_byte ;
           block_security_deposit
         }
     } ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   Lwt.return (
     Tez.(+?) credit block_security_deposit >>?
     Tez.(+?) fee >>?
@@ -259,7 +263,9 @@ let register_origination_inc ~credit () =
   Context.init 1 >>=? fun (b, contracts) ->
   let source_contract = List.hd contracts in
   Incremental.begin_construction b >>=? fun inc ->
-  Op.origination (I inc) ~credit source_contract >>=? fun (operation, new_contract) ->
+  Op.origination (I inc)
+    ~storage_limit:(Z.of_int Constants_repr.default.origination_size)
+    ~credit source_contract >>=? fun (operation, new_contract) ->
   Incremental.add_operation inc operation >>=? fun inc ->
   return (inc, source_contract, new_contract)
 
@@ -274,10 +280,11 @@ let origination_contract_from_origination_contract_not_enough_fund fee () =
   (* contract's balance is not enough to afford origination burn  *)
   Op.origination ~fee (I inc) ~credit:amount contract >>=? fun (operation, orig_contract) ->
   let expect_failure = function
-    | Alpha_environment.Ecoproto_error (Contract_storage.Balance_too_low _) :: _ ->
+    | Alpha_environment.Ecoproto_error (Alpha_context.Fees.Cannot_pay_storage_fee) :: _ ->
         return_unit
-    | _ ->
-        failwith "The contract has not enough funds, it fails!"
+    | e ->
+        failwith "The contract has not enough funds, it fails! %a"
+          Error_monad.pp_print_error e
   in
   Incremental.add_operation ~expect_failure inc operation >>=? fun inc ->
   Context.Contract.balance (I inc) contract >>=? fun balance_aft ->
diff --git a/src/proto_alpha/lib_protocol/test/rolls.ml b/src/proto_alpha/lib_protocol/test/rolls.ml
index 160209c71..ecc36fbf0 100644
--- a/src/proto_alpha/lib_protocol/test/rolls.ml
+++ b/src/proto_alpha/lib_protocol/test/rolls.ml
@@ -25,6 +25,8 @@
 
 open Proto_alpha
 open Alpha_context
+open Test_tez
+open Test_utils
 
 let account_pair = function
   | [a1; a2] -> (a1, a2)
@@ -153,7 +155,8 @@ let deactivation_then_empty_then_self_delegation () =
   Context.Contract.balance (B b) deactivated_contract >>=? fun balance ->
   let sink_account = Account.new_account () in
   let sink_contract = Contract.implicit_contract sink_account.pkh in
-  Context.get_constants (B b) >>=? fun { parametric = { origination_burn } } ->
+  Context.get_constants (B b) >>=? fun { parametric = { origination_size ; cost_per_byte } } ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   let amount = match Tez.(balance -? origination_burn) with Ok r -> r | Error _ -> assert false in
   Op.transaction (B b) deactivated_contract sink_contract amount >>=? fun empty_contract ->
   Block.bake ~policy:(By_account m2.pkh) ~operation:empty_contract b >>=? fun b ->
@@ -173,7 +176,8 @@ let deactivation_then_empty_then_self_delegation_then_recredit () =
   (* empty the contract *)
   let sink_account = Account.new_account () in
   let sink_contract = Contract.implicit_contract sink_account.pkh in
-  Context.get_constants (B b) >>=? fun { parametric = { origination_burn } } ->
+  Context.get_constants (B b) >>=? fun { parametric = { origination_size ; cost_per_byte } } ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   let amount = match Tez.(balance -? origination_burn) with Ok r -> r | Error _ -> assert false in
   Op.transaction (B b) deactivated_contract sink_contract amount >>=? fun empty_contract ->
   Block.bake ~policy:(By_account m2.pkh) ~operation:empty_contract b >>=? fun b ->
diff --git a/src/proto_alpha/lib_protocol/test/transfer.ml b/src/proto_alpha/lib_protocol/test/transfer.ml
index 99a32dace..c6a66e48b 100644
--- a/src/proto_alpha/lib_protocol/test/transfer.ml
+++ b/src/proto_alpha/lib_protocol/test/transfer.ml
@@ -53,7 +53,8 @@ let transfer_and_check_balances ?(with_burn = false) ~loc b ?(fee=Tez.zero) ?exp
   Context.Contract.balance (I b) dst >>=? fun bal_dst ->
   Op.transaction (I b) ~fee src dst amount >>=? fun op ->
   Incremental.add_operation ?expect_failure b op >>=? fun b ->
-  Context.get_constants (I b) >>=? fun { parametric = { origination_burn } } ->
+  Context.get_constants (I b) >>=? fun { parametric = { origination_size ; cost_per_byte } } ->
+  Tez.(cost_per_byte *? Int64.of_int origination_size) >>?= fun origination_burn ->
   let amount_fee_maybe_burn =
     if with_burn then
       match Tez.(amount_fee +? origination_burn) with