Ethereum Rethinks Fee Strategy Amid Developer Shift to Solana

Ethereum

Ethereum Rethinks Fee Strategy Amid Developer Shift to Solana

Two Ethereum community members, Kevin Owocki and Devansh Mehta, have introduced a new proposal aimed at making the Ethereum application layer more financially sustainable.

Their plan suggests a dynamic fee system that adjusts based on the size of a projects funding pool, aiming to balance fair fee extraction with developer incentives.

The proposal, published on April 27, outlines a system where fees are initially higher for smaller funding pools but taper off as projects scale. Using a square root function (sqrt(1000 x N)), fees would start proportionally larger for smaller projects — for instance, a $170,000 funding pool would face roughly a 7% overhead. However, once a projects pool surpasses $10 million, the fee would be capped at just 1%, encouraging larger scale growth without penalizing success.

This move reflects a broader push within the Ethereum community to rethink how value is distributed among builders, especially as rival blockchains compete aggressively for developer attention.

Competition has already intensified. In 2024, Solana attracted more new developers than Ethereum for the first time, pulling in over 7,600 newcomers compared to Ethereum‘s 6,400, according to data from Electric Capital. Although Ethereum still leads overall, it’s now facing serious pressure to maintain its dominance.

Adding to concerns, on-chain analytics firm Santiment recently reported that Ethereum network fees have dropped to their lowest levels in five years amid weakening demand for smart contract activity. The slowdown has caused some institutions to cut back their ETH holdings, raising alarms about Ethereums near-term growth prospects unless new momentum can be found.