- Ethereum developers have proposed a dynamic fee model to make app-layer fees fairer, supporting small builders while capping large project fees at 1%.
- The proposal aims to create a sustainable ecosystem by balancing developer incentives and fee extraction, amid growing concerns that Ethereum is losing its dominance to faster-growing chains like Solana.
Ethereum’s top minds are once again scrambling to fix a broken system nobody wants to admit is broken. Kevin Owocki and Devansh Mehta proposed a dynamic fee model on April 27, hoping to squeeze out something sustainable before app builders bail altogether.
According to a proposal on Ethresear.ch, the fix is essentially a square root function to determine fee percentages based on project funding size.
For small pools, the formula skims more aggressively: sqrt(1000 x N), where N is the funding amount. If your project pulls in US$170,000 (AU$264,566), the system would take roughly US$13,038 (AU$20,292) —about 7% — in overhead. So, big enough to matter, small enough to not kill the project outright.
The authors explained the benefits of this formula as:
By implementing a dynamic fee structure that scales with funding amounts, we can create a balanced system that works effectively across different funding scales and use cases. This approach avoids the extremes of insufficient incentives or excessive extraction, creating a more sustainable ecosystem for experimentation with dapps.
Kevin Owocki and Devansh Mehta
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Ethereum in Survival Mode
Owocki and Mehta’s pitch comes as Ethereum’s position as the default smart contract platform looks shakier by the month. Solana, which spent years as the punchline of high-speed rug pulls, onboarded 7,625 new developers in 2024 —outpacing Ethereum’s 6,456, as Crypto News Australia reported. Ethereum still leads in developer totals, but it’s no longer a runaway.
There’s some good news at least for ETH holders, as fees on Ethereum have cratered to five-year lows in April 2025. Unsurprisingly, low DeFi demand and crumbling smart contract activity gutted fee revenue —that one metric Ethereum maxis used to flaunt over the competition.
Institutions have noticed, too: many are quietly limiting ETH exposure as the network spins its wheels without delivering the next big catalyst.
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