Blockchain
Arbitrum (ARB), one of the most functional Ethereum-based Layer 2 scaling solutions, has provided insight into the mechanism employed to manage the fees generated on its platform. Taking to its official Twitter account, Arbitrum said it’s the “only combination that sends all excess revenue generated by transaction fees to their respective DAO.”
Fee generation model
According to the insights shared by the protocol, all users on Arbitrum One pay a fee when transacting on the network. This fee is split into two components, including L1 fees for covering trades on Ethereum and L2 fees for Arbitrum fees. From these fees generated, it said excess tokens are collected before being sent to the DAO.
All users on Arbitrum One pay a fee when transacting on the network. The fee is split into two components:
1. L1 fee to pay fees on Ethereum.
2. L2 fee to pay fees on Arbitrum.Excess L1 charges and all L2 charges are collected on-chain before being sent to the DAO.
— Arbitrum (💙,🧡) (@arbitrum) May 10, 2023
While L1 Fees are not spent immediately, as the Sequencer covers the costs upfront before later recovery, a large portion of the L1 Fee is earmarked for the Sequencer.
At the moment, Arbitrum has revealed that the total amount being billed for the Sequencer is pegged at 5,954 ETH worth approximately $10.9 million. The surplus of this amounts to 582 ETH, which can be sent to the DAO.
Arbitrum also revealed that the L2 fees accrued so far total 2770 ETH. As revealed, a total of 3,352 ETH will be billed to be sent to the DAO as a reward after the Sequencer refunds 5,954 ETH.
How does this help ARB?
With the Arbitrum protocol promising to trigger a call that will push for the collection of the accumulated Ether tokens by the DAO, the price of ARB registered a bullish rebound with more than 3% growth to $1.1229 at the time of to write.
Members of the Arbitrum community DAO will be the beneficiaries of this reward distribution when it is finally made. In particular, this could lead to an intense buyout of ARB to give users access and get good rewards. This event further expanded Arbitrum’s positive outlook as a viable scaling tool on Ethereum.