Introduction
In decentralized finance , there's something called the Shared Fee System (SFS). Let's break it down in simple terms, focusing on how it benefits users and why it matters and how Mode Network share the fees in the Mode ecosystem.
Mode is an Ethereum L2 built to encourage and support a cooperative on-chain experience. Users and builders grow as the network grows.
The goal of Mode is to empower developers and users to grow an ecosystem of world-class applications and be directly rewarded for their contribution to the ecosystem through Sequencer Fee Sharing and User Referral fees
Below is an illustration of how the Layer 2 sequencer (Mode) works like an “air traffic controller” arranging transactions before sending it back to Ethereum Layer 1 an while this happens “Mode”, the layer 2 sequencer is receiving some fees to execute this process. These fees being received by Mode is where the “Sequencer Fee Sharing” (SFS) comes in to help developers that build smart contracts opr decentralised application on this chain to be able to earn fee as reward for building with Mode Network.
This enables developers to register their smart contracts easily and receive rewards or a portion generated from Mode revenue for arranging this transactions on Ethereum chain into Layer 1 from the smart contracts they deploy.
In return, an NFT is issued as the claim to they earned fees or portion of revenue from Mode which is easily transferrable across multiple contracts on Ethereum.
Also in return, you het to use the claimed NFT (Non-fungible token) to claim the fees from your built and deployed smart contracts on Mode Network.
The Layer 2 sequencer is like “the air traffic controller “ for the specific L2 ecosystem that it serves. The Sequencer arranges transactions in Layer 2 solutions such as ZK Rollups and Optimistic. It gathers several transactions from the main network off-chain, bundles them, and then sends a summary to the decentralized mainnet— typically Ethereum. This procedure lowers fees while increasing transaction throughput or speed.
Basically, in very technical terms, a Layer 2 sequencer is a component in networking that helps manage the transmission of data frames across a network. It operates at the data link layer of the OSI (Open Systems Interconnection) model and is commonly associated with Ethernet networking.