Ethereum Community Proposes New Layer 2 Fee Structure

Ethereum researchers have proposed a new fee structure called “EXECUTE-precompile” designed to sustain network security through Layer 2 (L2) app activity, as discussions gain momentum within the community.

This proposal aims to realign Ethereum’s Layer 1 (L1) value accrual with evolving L2 ecosystems, addressing recent declines in fee revenue and staking returns.

Ethereum’s EXECUTE-precompile Proposal Under Community Consideration

The Ethereum community has initiated discussions on a proposal labeled “EXECUTE-precompile”, which focuses on ensuring Layer 2 apps contribute to Ethereum’s security. This move highlights efforts to sustain long-term network viability. Prominent Ethereum developers, including @o_herminator, are driving the initiative to address declining Layer 1 fees and enhance staking incentives. According to Herminator, Ethereum Researcher, “The EXECUTE-precompile could be Ethereum’s key to ensuring that L2 activity eventually funnels meaningful fees back to L1. By requiring upfront registration and continuous verification through the FDC-contract, rollups have no choice but to pay for the robust security Ethereum provides.” The proposal aims to adapt the network’s economic model amidst growing L2 adoption.

Community Anticipates Changes in Layer 2 Economics

Community members and developers are actively discussing the proposal on Ethereum forums, signaling heightened interest and concern over Ethereum’s economic future. Direct engagement is encouraged by proposal authors. Expected impacts include improved economic resilience for ETH holders and stakers, as well as possible shifts in L2 app cost structures. Prior proposals, such as EIP-4844, historically influenced fee-related dynamics and user activity.

Lessons from EIP-4844 Highlight Fee Model Challenges

Past Ethereum upgrades, like EIP-4844, showed that reducing user fees can initially lead to a decline in ETH prices as network fee revenues fall. Historical patterns provide insight into probable responses and outcomes. Experts emphasize the need for sustainable fee models to secure long-term asset value and security as Ethereum continues to integrate scalability solutions. This proposal represents a strategic shift aligning with past economic adjustments.