Members of the Ethereum community Kevin Ovaki and Devansh Mehta proposed a dynamic fee formula for decentralized applications (dApps). The authors explained their initiative in a post on Ethereum Research.
According to their idea, the structure is designed to balance between incentivizing developers and fair compensation:
«We propose a sustainable fee structure that provides a higher proportional reward for smaller funding and gradually decreases it for larger ones.»
According to the proposal, the fee will be determined by the formula:
The maximum of (√(1000 * N), N * 0.01), where N is the amount of funding.
For projects with smaller cash flows, the fee is determined by the square root function (√(1000 * N)), which provides a higher percentage fee. For example, for a pool of $170,000, it will be 7%. If the amount exceeds $10 million, the fee is fixed at 1%.
«Our goal is to provide viable incentives for developers without creating excessive burdens for users,» emphasized Ovaki and Mehta.
The proposal does not pertain to changes at the level of the Ethereum protocol itself. It is aimed at individual applications and may be particularly useful for crowdfunding platforms, public good funding, and private investments.
The next steps include testing this model on small projects, such as the new round of Gitcoin Grants and experiments with capital funds.
The initiators are also discussing the possibility of redirecting part of the fees to support the infrastructure of the dApps themselves.