Two members of the Ethereum community, Kevin Owocki and Devansh Mehta, have put forward a proposal for a dynamic fee structure aimed at balancing developer revenue with fairness.
Dynamic Fee Structure
The proposal outlined on April 27 describes a simple equation using a square root function to proportionally lower the percentage of fees as the funding capital allocated to a particular project grows. Owocki and Mehta explained:
> "For smaller funding amounts, the fee follows a square root function (sqrt(1000 x N)), providing proportionally higher returns to make building mechanisms for smaller pools worthwhile. For example, if the funding pool is $170,000, then the root of 1000 x 170,000 equals $13,038.4 or 7% is taken as overhead."
The authors added that fees would be capped at 1% once a particular application's funding pool crossed the $10 million level, ensuring that small app builders can develop decentralized applications without excess fees.
Comparison with Other Ecosystems
In 2024, the Solana ecosystem onboarded more developers than the Ethereum network, attracting 7,625 new developers compared to Ethereum's 6,456. Despite the surge in developers on Solana, Ethereum remains the dominant ecosystem for attracting developer talent, although the 2024 data shows that this position is no longer uncontested.
Current Trends and Their Impact on Ethereum
According to on-chain analytics firm Santiment, Ethereum fees dropped to five-year lows in April 2025 due to reduced activity on the Ethereum base layer. This decreased demand is leading many institutions to scale back their Ether holdings or sell off portions of their investment as investor sentiment toward the platform continues to erode.
The proposal for a dynamic fee structure reflects the need for reform in value distribution mechanisms and could help maintain Ethereum's economic viability amidst competition.
