We could also explore a similar approach that Ethereum took with EIP-1559. ![]()
Presently, SSV Network has two types of fees: Operator Fees and Network Fees.
The Operator Fees follow a free-market approach, allowing operators to set their desired fees. We should maintain the current structure for Operator Fees because it fosters a competitive environment, ensuring high-quality and cost-effective services for validators. ![]()
For the Network Fees, a different strategy can be implemented to address token inflation issues. Hereโs the proposed approach based on the EIP-1559
Modified EIP-1559 Implementation for Network Fees
Network Fee Mechanism: Introduce a dynamic network fee that adjusts based on network demand. This network fee will fluctuate with network congestion, increasing during high demand and decreasing during low demand.
Split Allocation and Burning: Instead of burning the entire network fee, split the fee into two parts:
Allocation to DAO Treasury: A portion of the network fee will go to the DAO Treasury to ensure continuous funding for network development and ecosystem projects.
Burning: The remaining portion of the fee will be burned to create deflationary pressure on the SSV token supply.
Example of Fee Allocation
- Normal Condition:
- Total Fee: 0.01 SSV
- To DAO Treasury: 0.007 SSV (70%)
- Burned: 0.003 SSV (30%)
- High Congestion:
- Total Fee: 0.012 SSV
- To DAO Treasury: 0.0084 SSV
- Burned: 0.0036 SSV
The SSV Network DAO could regularly monitor the impact of this new fee structure and adjust the split ratio as necessary based on network conditions and treasury needs. ![]()
Benefits
Funding the DAO: Ensures continuous funding for the DAO Treasury to support ecosystem development and growth.
Deflationary Effect: Maintains a deflationary pressure on the SSV token supply, potentially increasing token value.
Predictable Fees: Provides a stable and predictable fee structure for validators, improving user experience.
Challenges
Implementation Complexity: Requires careful implementation and testing to ensure the fee allocation mechanism works correctly.
Community Consensus: Needs broad community support and consensus to adopt this new fee structure.
By adopting this modified approach, the SSV Network can achieve the dual goals of creating deflationary pressure through burning fees while still ensuring that the DAO Treasury receives adequate funding to support the networkโs growth and development. ![]()