Crypto Daily - An Ethereum Improvement Proposal (EIP), dubbed EIP-6968, has been proposed by Ethereum developers to facilitate decentralized application (dApp) creators to earn a share of transaction fees generated on Layer 2 (L2).
On the outset, EIP-6968 aims to introduce a new type of token, the "Contract Secured Revenue" (CSR), which would allow developers to claim a percentage of transaction fees generated when users interact with their smart contracts.
Kevin Owocki, one of the co-authors of the proposal, envisages this development as an opportunity for projects to band together, form an L2 around shared ideas, and share sequencer fee revenue based on who drives the most usage.
Mechanism and Scaling
Layer 2 solutions play a crucial role in enhancing the scalability of the Ethereum network. By conducting transactions off the main Ethereum blockchain (Layer 1 or L1), they mitigate network congestion and reduce transaction costs, whhich can skyrocket during peak periods. Layer 2 solutions use various methods like state channels, sidechains, and rollups, enabling faster and more efficient transaction processing. They significantly boost the tranbsaction throughput, thereby facilitating a smoother, more scalable experience for users and developers.
In terms of the relation between L2s and the EIP-6968 proposal, the former allows smart contract developers to tap into potentially lucrative revenue streams. By introducing the concept of "Contract Secured Revenue" (CSR), Layer 2 can incentivize developers to create and deploy their dApps on these networks, fostering innovation and community growth. It creates a positive feedback loop - the more a developer's smart contracts are used, the more transaction fees they can potentially earn. This not only motivates developers but also accelerates the overall development and scaling of the Ethereum ecosystem.
Adoption and Potential Impact
The revenue generated from CSR could be utilized for multiple purposes, such as funding dApp development, public goods, or incentivizing developers to join a network. While Owocki initially proposed EIP-6968 in May, it has garnered increased attention following his presentation at the recent EthCC conference in Paris.
EIP-6968 promises to revolutionize the fiercely competitive Ethereum scaling sector by introducing a novel type of incentive for developers. The proposal posits using protocol rewards of L1 to fund smart contract development, a significant change from what is the current state of market mechanisms in place.
EIP-6968, viewed as a step ahead from app-chains, is designed to enable "ecosystem-chains" that host multiple decentralized applications. It is essentially a modified version of EIP-1559, which implemented Ethereum’s burn mechanism back in August 2021.
The proposed upgrade could be adopted by any network that uses EIP-1559. Owocki expressed optimism about the potential traction within the L2 ecosystem, predicting a beneficial cycle where smart contract developers receive revenue for the value they contribute to L2s.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
This content was originally published on Crypto Daily
