Developers of Ethereum have proposed a scaling solution that will offer decentralized applications (dApps) the opportunity for revenue sharing in terms of transaction fees that they generate on Layer 2.
Ethereum Upgrade to Offer Revenue Sharing for Layer 2 Developers
EIP-6968 plans to introduce a type of token that offers contract-secured revenue (CSR). This will allow developers to receive a share of the transaction fees generated by users interacting with their smart contracts.
According to Kevin Owocki, one of the co-authors of the proposal, CSR will enable new projects to join and build a Layer 2 environment around their values, sharing sequencer fee earnings based on the user with the most usage. If accepted, it will provide smart contract developers on Layer 2 with a viable avenue for income generation.
These new income streams can be used to fund dApp development, public goods, and incentivize developers to join a network. EIP-6968 was first introduced in May 2023, and has gained momentum after a presentation by Owocki at the EthCC conference in Paris.
Road to Layer 3 network deployments
Given that Layer 2 rollups are the leading Ethereum upgrade solution, major Layer 2 players such as Arbitrum, Polygon, and zkSync have started pooling resources to create a framework for Layer 3 networks. Layer 3s consist of app chains dedicated to a single decentralized application. According to Owocki, EIP-6968 caters to ecosystem chains and is a step beyond app chains.
The proposed scaling is a new version of EIP-1559, which went live in August 2021 and introduced Ethereum’s burn mechanism. According to the authors, any network using EIP-1559 can also use EIP-6968.
The proposal suggests that using protocol rewards from Layer 1 to fund smart contract development could be a game changer. Owocki believes it will be interesting to see what kind of movement this will create in the Layer 2 ecosystem and for smart contract developers earning revenue for their contributions to Layer 2.
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