diff --git a/packages/core/__tests__/attrsFallthrough.spec.ts b/packages/core/__tests__/attrsFallthrough.spec.ts
index 7d59e19e..41bf51bd 100644
--- a/packages/core/__tests__/attrsFallthrough.spec.ts
+++ b/packages/core/__tests__/attrsFallthrough.spec.ts
@@ -1,9 +1,9 @@
 // using DOM renderer because this case is mostly DOM-specific
-import { h, render, Component, nextTick } from '@vue/renderer-dom'
+import { h, render, Component, nextTick, cloneVNode } from '@vue/renderer-dom'
 
 describe('attribute fallthrough', () => {
-  it('should not fallthrough on components with no declared props', async () => {
-    const nativeClick = jest.fn()
+  it('everything should be in props when component has no declared props', async () => {
+    const click = jest.fn()
     const childUpdated = jest.fn()
 
     class Hello extends Component<{}, { count: number }> {
@@ -14,7 +14,7 @@ describe('attribute fallthrough', () => {
       }
       inc() {
         this.count++
-        nativeClick()
+        click()
       }
       render() {
         return h(Child, {
@@ -22,23 +22,26 @@ describe('attribute fallthrough', () => {
           id: 'test',
           class: 'c' + this.count,
           style: { color: this.count ? 'red' : 'green' },
-          nativeOnClick: this.inc
+          onClick: this.inc
         })
       }
     }
 
-    class Child extends Component<{ foo: number }> {
+    class Child extends Component {
       updated() {
         childUpdated()
       }
-      render() {
-        return h(
-          'div',
-          {
-            class: 'c2',
-            style: { fontWeight: 'bold' }
-          },
-          this.$props.foo
+      render(props: any) {
+        return cloneVNode(
+          h(
+            'div',
+            {
+              class: 'c2',
+              style: { fontWeight: 'bold' }
+            },
+            props.foo
+          ),
+          props
         )
       }
     }
@@ -49,28 +52,25 @@ describe('attribute fallthrough', () => {
 
     const node = root.children[0] as HTMLElement
 
-    // attrs do not fallthrough because no props are declared
-    expect(node.hasAttribute('id')).toBe(false)
-    expect(node.hasAttribute('foo')).toBe(false)
-
-    // class, style and nativeOn* always fallthrough
+    expect(node.getAttribute('id')).toBe('test')
+    expect(node.getAttribute('foo')).toBe('1')
     expect(node.getAttribute('class')).toBe('c2 c0')
     expect(node.style.color).toBe('green')
     expect(node.style.fontWeight).toBe('bold')
     node.dispatchEvent(new CustomEvent('click'))
-    expect(nativeClick).toHaveBeenCalled()
+    expect(click).toHaveBeenCalled()
 
     await nextTick()
     expect(childUpdated).toHaveBeenCalled()
-    expect(node.hasAttribute('id')).toBe(false)
-    expect(node.hasAttribute('foo')).toBe(false)
+    expect(node.getAttribute('id')).toBe('test')
+    expect(node.getAttribute('foo')).toBe('1')
     expect(node.getAttribute('class')).toBe('c2 c1')
     expect(node.style.color).toBe('red')
     expect(node.style.fontWeight).toBe('bold')
   })
 
-  it('should fallthrough on components with declared props', async () => {
-    const nativeClick = jest.fn()
+  it('should separate in attrs when component has declared props', async () => {
+    const click = jest.fn()
     const childUpdated = jest.fn()
 
     class Hello extends Component<{}, { count: number }> {
@@ -81,7 +81,7 @@ describe('attribute fallthrough', () => {
       }
       inc() {
         this.count++
-        nativeClick()
+        click()
       }
       render() {
         return h(Child, {
@@ -89,7 +89,7 @@ describe('attribute fallthrough', () => {
           id: 'test',
           class: 'c' + this.count,
           style: { color: this.count ? 'red' : 'green' },
-          nativeOnClick: this.inc
+          onClick: this.inc
         })
       }
     }
@@ -102,13 +102,16 @@ describe('attribute fallthrough', () => {
         childUpdated()
       }
       render() {
-        return h(
-          'div',
-          {
-            class: 'c2',
-            style: { fontWeight: 'bold' }
-          },
-          this.$props.foo
+        return cloneVNode(
+          h(
+            'div',
+            {
+              class: 'c2',
+              style: { fontWeight: 'bold' }
+            },
+            this.$props.foo
+          ),
+          this.$attrs
         )
       }
     }
@@ -121,27 +124,27 @@ describe('attribute fallthrough', () => {
 
     // with declared props, any parent attr that isn't a prop falls through
     expect(node.getAttribute('id')).toBe('test')
-    // ...while declared ones remain props
-    expect(node.hasAttribute('foo')).toBe(false)
-
-    // class, style and nativeOn* always fallthrough
     expect(node.getAttribute('class')).toBe('c2 c0')
     expect(node.style.color).toBe('green')
     expect(node.style.fontWeight).toBe('bold')
     node.dispatchEvent(new CustomEvent('click'))
-    expect(nativeClick).toHaveBeenCalled()
+    expect(click).toHaveBeenCalled()
+
+    // ...while declared ones remain props
+    expect(node.hasAttribute('foo')).toBe(false)
 
     await nextTick()
     expect(childUpdated).toHaveBeenCalled()
     expect(node.getAttribute('id')).toBe('test')
-    expect(node.hasAttribute('foo')).toBe(false)
     expect(node.getAttribute('class')).toBe('c2 c1')
     expect(node.style.color).toBe('red')
     expect(node.style.fontWeight).toBe('bold')
+
+    expect(node.hasAttribute('foo')).toBe(false)
   })
 
   it('should fallthrough on multi-nested components', async () => {
-    const nativeClick = jest.fn()
+    const click = jest.fn()
     const childUpdated = jest.fn()
     const grandChildUpdated = jest.fn()
 
@@ -153,7 +156,7 @@ describe('attribute fallthrough', () => {
       }
       inc() {
         this.count++
-        nativeClick()
+        click()
       }
       render() {
         return h(Child, {
@@ -161,20 +164,17 @@ describe('attribute fallthrough', () => {
           id: 'test',
           class: 'c' + this.count,
           style: { color: this.count ? 'red' : 'green' },
-          nativeOnClick: this.inc
+          onClick: this.inc
         })
       }
     }
 
     class Child extends Component {
-      static props = {
-        foo: Number
-      }
       updated() {
         childUpdated()
       }
-      render(props: any) {
-        return h(GrandChild, props)
+      render() {
+        return h(GrandChild, this.$props)
       }
     }
 
@@ -186,13 +186,16 @@ describe('attribute fallthrough', () => {
         grandChildUpdated()
       }
       render(props: any) {
-        return h(
-          'div',
-          {
-            class: 'c2',
-            style: { fontWeight: 'bold' }
-          },
-          props.foo
+        return cloneVNode(
+          h(
+            'div',
+            {
+              class: 'c2',
+              style: { fontWeight: 'bold' }
+            },
+            props.foo
+          ),
+          this.$attrs
         )
       }
     }
@@ -205,23 +208,23 @@ describe('attribute fallthrough', () => {
 
     // with declared props, any parent attr that isn't a prop falls through
     expect(node.getAttribute('id')).toBe('test')
-    // ...while declared ones remain props
-    expect(node.hasAttribute('foo')).toBe(false)
-
-    // class, style and nativeOn* always fallthrough
     expect(node.getAttribute('class')).toBe('c2 c0')
     expect(node.style.color).toBe('green')
     expect(node.style.fontWeight).toBe('bold')
     node.dispatchEvent(new CustomEvent('click'))
-    expect(nativeClick).toHaveBeenCalled()
+    expect(click).toHaveBeenCalled()
+
+    // ...while declared ones remain props
+    expect(node.hasAttribute('foo')).toBe(false)
 
     await nextTick()
     expect(childUpdated).toHaveBeenCalled()
     expect(grandChildUpdated).toHaveBeenCalled()
     expect(node.getAttribute('id')).toBe('test')
-    expect(node.hasAttribute('foo')).toBe(false)
     expect(node.getAttribute('class')).toBe('c2 c1')
     expect(node.style.color).toBe('red')
     expect(node.style.fontWeight).toBe('bold')
+
+    expect(node.hasAttribute('foo')).toBe(false)
   })
 })
diff --git a/packages/core/src/component.ts b/packages/core/src/component.ts
index 9f01c284..ec5254d4 100644
--- a/packages/core/src/component.ts
+++ b/packages/core/src/component.ts
@@ -24,7 +24,6 @@ export interface FunctionalComponent<P = {}> {
   (props: Readonly<P>, slots: Slots, attrs: Data): any
   pure?: boolean
   props?: ComponentPropsOptions<P>
-  inheritAttrs?: boolean
   displayName?: string
 }
 
diff --git a/packages/core/src/componentOptions.ts b/packages/core/src/componentOptions.ts
index a75148ba..690daab1 100644
--- a/packages/core/src/componentOptions.ts
+++ b/packages/core/src/componentOptions.ts
@@ -8,7 +8,6 @@ export interface ComponentClassOptions<This = ComponentInstance> {
   computed?: ComponentComputedOptions<This>
   watch?: ComponentWatchOptions<This>
   displayName?: string
-  inheritAttrs?: boolean
 }
 
 export interface ComponentOptions<This = ComponentInstance>
diff --git a/packages/core/src/componentProps.ts b/packages/core/src/componentProps.ts
index fe95aa81..e10d6a95 100644
--- a/packages/core/src/componentProps.ts
+++ b/packages/core/src/componentProps.ts
@@ -7,14 +7,7 @@ import {
   Prop,
   PropType
 } from './componentOptions'
-import {
-  EMPTY_OBJ,
-  nativeOnRE,
-  vnodeHookRE,
-  camelize,
-  hyphenate,
-  capitalize
-} from './utils'
+import { EMPTY_OBJ, camelize, hyphenate, capitalize } from './utils'
 
 export function initializeProps(
   instance: ComponentInstance,
@@ -67,7 +60,7 @@ const EMPTY_PROPS = { props: EMPTY_OBJ }
 
 // resolve raw VNode data.
 // - filter out reserved keys (key, ref, slots)
-// - extract class, style and nativeOn* into $attrs (to be merged onto child
+// - extract class and style into $attrs (to be merged onto child
 //   component root)
 // - for the rest:
 //   - if has declared props: put declared ones in `props`, the rest in `attrs`
@@ -89,17 +82,9 @@ export function resolveProps(
       if (key === 'key' || key === 'ref' || key === 'slots') {
         continue
       }
-      // class, style, nativeOn & directive hooks are always extracted into a
-      // separate `attrs` object, which can then be merged onto child component
-      // root. in addition, if the component has explicitly declared props, then
-      // any non-matching props are extracted into `attrs` as well.
-      if (
-        key === 'class' ||
-        key === 'style' ||
-        vnodeHookRE.test(key) ||
-        nativeOnRE.test(key) ||
-        (hasDeclaredProps && !options.hasOwnProperty(key))
-      ) {
+      // any non-declared data are put into a separate `attrs` object
+      // for spreading
+      if (hasDeclaredProps && !options.hasOwnProperty(key)) {
         ;(attrs || (attrs = {}))[key] = rawData[key]
       } else {
         props[key] = rawData[key]
diff --git a/packages/core/src/componentUtils.ts b/packages/core/src/componentUtils.ts
index 04d8705c..cd58957c 100644
--- a/packages/core/src/componentUtils.ts
+++ b/packages/core/src/componentUtils.ts
@@ -55,11 +55,12 @@ export function createComponentInstance(
 export function renderInstanceRoot(instance: ComponentInstance): VNode {
   let vnode
   try {
-    vnode = instance.render.call(instance.$proxy, h, {
-      props: instance.$props,
-      slots: instance.$slots,
-      attrs: instance.$attrs
-    })
+    vnode = instance.render.call(
+      instance.$proxy,
+      instance.$props,
+      instance.$slots,
+      instance.$attrs
+    )
   } catch (e1) {
     handleError(e1, instance, ErrorTypes.RENDER)
     if (__DEV__ && instance.renderError) {
@@ -70,12 +71,7 @@ export function renderInstanceRoot(instance: ComponentInstance): VNode {
       }
     }
   }
-  return normalizeComponentRoot(
-    vnode,
-    instance.$parentVNode,
-    instance.$attrs,
-    instance.constructor.inheritAttrs
-  )
+  return normalizeComponentRoot(vnode, instance.$parentVNode)
 }
 
 export function teardownComponentInstance(instance: ComponentInstance) {
@@ -95,9 +91,7 @@ export function teardownComponentInstance(instance: ComponentInstance) {
 
 export function normalizeComponentRoot(
   vnode: any,
-  componentVNode: VNode | null,
-  attrs: Record<string, any> | void,
-  inheritAttrs: boolean | void
+  componentVNode: VNode | null
 ): VNode {
   if (vnode == null) {
     vnode = createTextVNode('')
@@ -105,12 +99,7 @@ export function normalizeComponentRoot(
     vnode = createTextVNode(vnode + '')
   } else if (Array.isArray(vnode)) {
     if (vnode.length === 1) {
-      vnode = normalizeComponentRoot(
-        vnode[0],
-        componentVNode,
-        attrs,
-        inheritAttrs
-      )
+      vnode = normalizeComponentRoot(vnode[0], componentVNode)
     } else {
       vnode = createFragment(vnode)
     }
@@ -120,13 +109,7 @@ export function normalizeComponentRoot(
       componentVNode &&
       (flags & VNodeFlags.COMPONENT || flags & VNodeFlags.ELEMENT)
     ) {
-      if (
-        inheritAttrs !== false &&
-        attrs !== void 0 &&
-        Object.keys(attrs).length > 0
-      ) {
-        vnode = cloneVNode(vnode, attrs)
-      } else if (el) {
+      if (el) {
         vnode = cloneVNode(vnode)
       }
       if (flags & VNodeFlags.COMPONENT) {
@@ -188,6 +171,8 @@ export function createComponentClassFromOptions(
           proto.beforeUnmount = value
         } else if (key === 'destroyed') {
           proto.unmounted = value
+        } else {
+          proto[key] = value
         }
       } else {
         proto[key] = value
diff --git a/packages/core/src/createRenderer.ts b/packages/core/src/createRenderer.ts
index f03acf09..cf55e002 100644
--- a/packages/core/src/createRenderer.ts
+++ b/packages/core/src/createRenderer.ts
@@ -238,9 +238,7 @@ export function createRenderer(options: RendererOptions) {
     const { props, attrs } = resolveProps(data, render.props)
     const subTree = (vnode.children = normalizeComponentRoot(
       render(props, slots || EMPTY_OBJ, attrs || EMPTY_OBJ),
-      vnode,
-      attrs,
-      render.inheritAttrs
+      vnode
     ))
     mount(subTree, container, parentComponent, isSVG, endNode)
     vnode.el = subTree.el as RenderNode
@@ -526,9 +524,7 @@ export function createRenderer(options: RendererOptions) {
       const { props, attrs } = resolveProps(nextData, render.props)
       const nextTree = (nextVNode.children = normalizeComponentRoot(
         render(props, nextSlots || EMPTY_OBJ, attrs || EMPTY_OBJ),
-        nextVNode,
-        attrs,
-        render.inheritAttrs
+        nextVNode
       ))
       patch(prevTree, nextTree, container, parentComponent, isSVG)
       nextVNode.el = nextTree.el
diff --git a/packages/core/src/h.ts b/packages/core/src/h.ts
index f423ddeb..d56950ef 100644
--- a/packages/core/src/h.ts
+++ b/packages/core/src/h.ts
@@ -9,7 +9,7 @@ import {
   createFragment,
   createPortal
 } from './vdom'
-import { isObservable, unwrap } from '@vue/observer'
+import { isObservable } from '@vue/observer'
 
 export const Fragment = Symbol()
 export const Portal = Symbol()
@@ -44,9 +44,9 @@ export const h = ((tag: ElementType, data?: any, children?: any): VNode => {
   if (children === void 0) children = null
 
   // if value is observable, create a clone of original
-  // so that we can mutate it later on.
+  // so that we can normalize its class/style
   if (isObservable(data)) {
-    data = Object.assign({}, unwrap(data))
+    data = Object.assign({}, data)
   }
 
   let key = null
diff --git a/packages/core/src/index.ts b/packages/core/src/index.ts
index d4e203b1..6c2d323c 100644
--- a/packages/core/src/index.ts
+++ b/packages/core/src/index.ts
@@ -11,7 +11,10 @@ export * from '@vue/observer'
 export { nextTick } from '@vue/scheduler'
 
 // Internal API
-export { createComponentInstance } from './componentUtils'
+export {
+  createComponentInstance,
+  createComponentClassFromOptions
+} from './componentUtils'
 
 // Optional APIs
 // these are imported on-demand and can be tree-shaken
diff --git a/packages/core/src/utils.ts b/packages/core/src/utils.ts
index 25cd87f0..701aa69c 100644
--- a/packages/core/src/utils.ts
+++ b/packages/core/src/utils.ts
@@ -3,9 +3,8 @@ export const EMPTY_OBJ: { readonly [key: string]: any } = Object.freeze({})
 export const NOOP = () => {}
 
 export const onRE = /^on/
-export const nativeOnRE = /^nativeOn/
 export const vnodeHookRE = /^vnode/
-export const handlersRE = /^on|^nativeOn|^vnode/
+export const handlersRE = /^on|^vnode/
 export const reservedPropRE = /^(?:key|ref|slots)$|^vnode/
 
 export function normalizeStyle(
diff --git a/packages/core/src/vdom.ts b/packages/core/src/vdom.ts
index d5dfd2ae..0719bdfb 100644
--- a/packages/core/src/vdom.ts
+++ b/packages/core/src/vdom.ts
@@ -277,7 +277,7 @@ export function cloneVNode(vnode: VNode, extraData?: VNodeData): VNode {
               extraData.style
             ])
           } else if (handlersRE.test(key)) {
-            // on*, nativeOn*, vnode*
+            // on*, vnode*
             const existing = clonedData[key]
             clonedData[key] = existing
               ? [].concat(existing, extraData[key])
diff --git a/packages/renderer-dom/src/patchData.ts b/packages/renderer-dom/src/patchData.ts
index fef6ce56..be805a54 100644
--- a/packages/renderer-dom/src/patchData.ts
+++ b/packages/renderer-dom/src/patchData.ts
@@ -5,7 +5,7 @@ import { patchAttr } from './modules/attrs'
 import { patchDOMProp } from './modules/props'
 import { patchEvent } from './modules/events'
 
-export const onRE = /^on|^nativeOn/
+export const onRE = /^on/
 const domPropsRE = /^domProps/
 
 export function patchData(
diff --git a/packages/vue/src/index.ts b/packages/vue/src/index.ts
index 72675acf..7fed1d2f 100644
--- a/packages/vue/src/index.ts
+++ b/packages/vue/src/index.ts
@@ -3,7 +3,8 @@ import {
   render,
   nextTick,
   Component,
-  createComponentInstance
+  createComponentInstance,
+  createComponentClassFromOptions
 } from '@vue/renderer-dom'
 
 // Note: typing for this is intentionally loose, as it will be using 2.x types.
@@ -20,9 +21,10 @@ class Vue extends Component {
 
     // in compat mode, h() can take an options object and will convert it
     // to a 3.x class-based component.
-    const vnode = h(options)
+    const Component = createComponentClassFromOptions(options)
+    const vnode = h(Component)
     // the component class is cached on the options object as ._normalized
-    const instance = createComponentInstance(vnode, options._normalized, null)
+    const instance = createComponentInstance(vnode, Component, null)
     // set the instance on the vnode before mounting.
     // the mount function will skip creating a new instance if it finds an
     // existing one.
@@ -48,4 +50,3 @@ interface Vue {
 }
 
 export default Vue
-export * from '@vue/renderer-dom'