Blockchain News

Proposed Ethereum Upgrade Could Allow Layer 2 Developers To Share Fee Revenue

To incentivize and reward developers of popular decentralized applications (dApps) on Layer 2, Ethereum developers are proposing an upgrade known as EIP-6968. This proposal introduces a new concept called “contract secured revenue” (CSR), allowing dApp developers to earn a share of the transaction fees generated by users interacting with their smart contracts.

The CSR mechanism is seen as a potential game-changer for the Ethereum scaling sector, providing developers with a lucrative revenue stream. Under this upgrade, projects can collaborate and create a Layer 2 ecosystem around shared values and themes. The developers behind the most widely used smart contracts would then be entitled to a percentage of the sequencer fee revenue, giving them an additional financial incentive to deploy on Layer 2 networks.

The renewed interest in EIP-6968 stems from a recent presentation by Kevin Owocki, one of the proposal’s co-authors, at the EthCC conference in Paris. Owocki believes that CSR could fund dApp development, contribute to public goods, and incentivize developers to join the network.

Currently, Layer 2 rollups are the dominant scaling solution, with prominent teams like Arbitrum, Polygon, and zkSync investing resources in building Layer 3 networks, also known as “app-chains,” which host a single dedicated decentralized application. EIP-6968 takes a step forward, enabling what Owocki refers to as “ecosystem-chains,” which go beyond app-chains and foster collaborative efforts among developers.

The proposed upgrade is a modified version of EIP-1559, which was implemented in August 2021 and introduced Ethereum’s burn mechanism. This new proposal can be implemented on any network using EIP-1559, opening the door for broader adoption and application.

The potential use of protocol rewards on Layer 1 (L1) to fund smart contract development represents a significant shift in the current market dynamics. As the proposal gains traction within the Layer 2 ecosystem, it could set a virtuous cycle where competent contract developers receive revenue commensurate with the value they bring to Layer 2 networks.

EIP-6968 will likely spark further discussions and exploration within the Ethereum community, with developers and stakeholders eagerly observing how this new incentive structure could shape the future of dApps and the broader Ethereum ecosystem.


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