Sequencer Fee Sharing

What are Sequencer Fees?

As an Arbitrum Nitro Layer 2, Edgeless earns fees from the network sequencer. As a Arbitrum Nitro Chain, a portion of these fees go to Arbitrum and the remaining fees go to smart contracts created by Edgeless. In order to incentivize developers to create, deploy, and maintain applications on the network, the majority of fees generated from the network sequencer will be redistributed to builders.

More information on this will be released in the coming weeks and the percent of earnings that goes to builders and the way it is distributed will eventually be decided by the Edgeless community. To start, 70% of the sequencer fees post arbitrum fees will go back to developers, with the remaining 30% being split between the foundation and user giveaways.

Sequencer Fees for Developers

In order to incentivize developers to build on the ecosystem, 70% of sequencer fees will be redistributed to dApps. In order to qualify for SFS, developers will need to be whitelisted -- the main requirement being that they do not charge application fees to users. Given Edgeless is a permissionless chain, anyone can launch an app on the ecosystem, but in order to qualify for yield and SFS applications, developers must be whitelisted and show that they are fee free.

The way in which yield and SFS will be redistributed to dApps will be based on the activity that each dApp has which will be calculated via a formula to be published in the near future -- the main inputs will include number of users, TVL on the platform, and volume / activity per dApp.

This is very similar to the way in which web 2 ecosystems like Roblox and Epic redistribute earnings to developers who create games in their ecosystem.

Sequencer Fees for Users

A fixed portion of the SFS will go toward on-chain lotteries, which will be held on a recurring basis for users to get a portion of the fees generated by the Edgeless chain. To start, every 6 hours, $250 will be randomly given away to a wallet address that performed an on-chain activity. As the chain grows and SFS increases, the frequency and quantum of reward will increase to reward active users in the ecosystem.

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