Developer-Takes-All (DTA) models, like those used by early DeFi protocols such as Uniswap V2, concentrate all protocol fees and MEV revenue to the core developers or token holders. This creates a powerful, centralized incentive to maximize protocol performance and security, often leading to rapid feature development and high capital efficiency. For example, a DTA model can directly fund a $50M+ development treasury, enabling aggressive roadmap execution without diluting token value.
LABS
Comparisons
Developer-Takes-All vs. Shared Revenue Models
A technical analysis of AVS revenue distribution models, contrasting Developer-Takes-All architectures with Shared Revenue protocols. Evaluates impact on operator incentives, protocol security, and ecosystem growth for infrastructure decision-makers.
Chainscore © 2026
introduction
THE ANALYSIS
Introduction: The AVS Revenue Model Dilemma
Choosing a revenue model for your Actively Validated Service (AVS) is a foundational decision that dictates your protocol's economic incentives, developer appeal, and long-term sustainability.
Shared Revenue models, exemplified by protocols like Lido and EigenLayer, distribute a significant portion of fees to external operators and stakers. This strategy sacrifices some direct developer revenue to bootstrap a decentralized network of node operators and attract TVL—Lido commands over $30B in staked ETH by sharing rewards. The trade-off is a more complex governance structure and potentially slower protocol iteration, as upgrades require broader consensus among stakeholders.
The key trade-off: If your priority is speed, control, and maximizing developer resources for a high-stakes financial application, choose a Developer-Takes-All model. If you prioritize decentralized security, rapid ecosystem bootstrapping, and aligning with a wider set of stakeholders like restakers, a Shared Revenue model is the superior choice.
tldr-summary
Developer-Takes-All vs. Shared Revenue Models
TL;DR: Core Differentiators
Key strengths and trade-offs at a glance for protocol builders choosing a foundational economic model.
01
Developer-Takes-All (e.g., Ethereum, Solana)
Maximizes protocol-level profit capture: Developers retain 100% of application fees and MEV. This matters for venture-backed startups and high-margin DeFi protocols like Uniswap or Aave, where revenue is critical for sustainability and token value accrual.
100%
Fee Retention
02
Developer-Takes-All (e.g., Ethereum, Solana)
Demands aggressive user acquisition: No native token distribution to users means you must bootstrap liquidity and community from scratch. This matters for new entrants in competitive markets (e.g., a new DEX) where you compete with protocols that can offer yield subsidies.
03
Shared Revenue (e.g., Arbitrum, Optimism, Blast)
Aligns incentives with users via yield: A portion of sequencer fees or gas fees is shared directly with users who stake the native token (e.g., ARB, OP). This matters for rapid TVL bootstrapping and building sticky communities, as seen with Blast's $2B+ inflow in days.
$2B+
Blast TVL Inflow
04
Shared Revenue (e.g., Arbitrum, Optimism, Blast)
Introduces complex tokenomics and regulatory overhead: Distributing yield requires careful token emission schedules and may attract securities scrutiny. This matters for teams prioritizing long-term regulatory clarity or those who want to avoid managing a liquid token from day one.
ECONOMIC MODEL BREAKDOWN
Feature Comparison: Developer-Takes-All vs. Shared Revenue
Direct comparison of key economic and incentive metrics for blockchain protocols.
| Metric | Developer-Takes-All Model | Shared Revenue Model |
|---|---|---|
Primary Revenue Recipient | Protocol/Foundation | Validators & Delegators |
Developer Incentive Structure | Grants & Token Allocations | Direct Protocol Fee Share |
Validator APR from Fees | 0% | 5-15% |
Typical Protocol Fee | 0.1% - 0.8% | 0.05% - 0.3% |
Examples | Arbitrum, Optimism, Base | Solana, Avalanche, Polygon |
MEV Redistribution | ||
Staker/Validator Alignment | Low | High |
pros-cons-a
Two Models, One Decision
Developer-Takes-All Model: Pros and Cons
A data-driven breakdown of the dominant revenue models for blockchain protocols. Choose based on your project's stage, tokenomics, and community goals.
01
Developer-Takes-All (e.g., Solana, Avalanche)
Maximizes Builder Incentives: 100% of protocol fees (e.g., priority tips, MEV) go to validators and core developers. This creates a powerful flywheel for attracting top-tier infrastructure talent, as seen with Solana's ~$60M+ annualized fee revenue for validators.
Best for: High-throughput L1s and L2s in hyper-growth mode, where attracting core protocol developers and securing the network with high validator rewards is the primary goal.
100%
Fees to Core
~$60M
Solana Validator Rev (Annualized)
02
Shared Revenue (e.g., Optimism, Arbitrum)
Aligns Ecosystem Growth: A portion of sequencer fees (e.g., 2.5 ETH per day on Optimism) is distributed retroactively to public goods and application developers via programs like RetroPGF. This funds ecosystem tooling and dApp development.
Best for: Mature L2s and appchains where sustainable, long-term ecosystem development and developer loyalty are more critical than maximizing validator payouts.
$160M+
OP Stack RetroPGF Rounds
2.5 ETH/day
Base Fee Sharing (Example)
03
Con: DTA - Ecosystem Fragility Risk
Concentrates Value at the Base Layer: While core infra thrives, application developers see no direct protocol revenue share. This can lead to extractive relationships and higher churn, as seen in debates around Solana's lack of native fee-sharing for dApps.
Avoid if: Your protocol's success is predicated on a rich, stable, and financially-incentivized application layer (e.g., a DeFi-centric chain).
04
Con: Shared - Execution & Dilution Complexity
Introduces Governance Overhead: Distributing funds requires complex DAO governance (e.g., Optimism's Citizen House) and can lead to political friction. Funds may be diluted across many projects, reducing the impact per grant.
Avoid if: You need to move fast, allocate capital with surgical precision, or are in the early stages where every dollar must go to core protocol security and performance.
pros-cons-b
Developer-Takes-All vs. Shared Revenue
Shared Revenue Model: Pros and Cons
A technical breakdown of the dominant economic models for blockchain protocols, focusing on incentives, sustainability, and developer adoption.
01
Developer-Takes-All: Maximalist Incentives
Direct fee capture: Developers retain 100% of application revenue (e.g., Uniswap's swap fees, OpenSea's marketplace fees). This creates a powerful, immediate incentive for high-value projects to build and optimize for user growth. It's the standard for permissionless L1s like Ethereum and Solana.
100%
Fee Capture
02
Developer-Takes-All: Protocol Risk
Zero protocol alignment: Successful apps contribute no value back to the underlying protocol's security or treasury (the "free-rider problem"). This can lead to underfunded public goods (R&D, core devs) and force protocols to rely on inflationary token emissions, as seen in early DeFi 1.0.
03
Shared Revenue: Sustainable Public Goods
Protocol-Application Symbiosis: A portion of application fees (e.g., 10-20%) is directed to the protocol treasury or stakers. This funds core development and security, creating a flywheel. Examples include Optimism's RetroPGF funding public goods and dYdX sharing fees with stakers.
$200M+
OP RetropGF Funding
04
Shared Revenue: Adoption Friction
Reduced initial margins: Taking a cut of revenue can deter early-stage developers where every basis point matters. This creates a classic trade-off: long-term protocol health vs. short-term developer attraction. Protocols like Celo and Osmosis use this model but must compete on other vectors like lower gas fees.
CHOOSE YOUR PRIORITY
Decision Framework: When to Choose Which Model
Developer-Takes-All for DeFi
Verdict: The Standard Choice for Permissionless Innovation. Strengths: This model is the bedrock of major DeFi ecosystems like Ethereum and Arbitrum. It attracts top-tier developers by offering full control and upside from novel primitives (e.g., Uniswap's fee switch, Aave's governance). The competitive, winner-take-all dynamic has driven rapid innovation in lending, derivatives, and DEXs. TVL and liquidity naturally consolidate around the best-in-class protocols built under this incentive structure.
Shared Revenue for DeFi
Verdict: Niche for Community-Aligned or Newer Chains. Strengths: Models like Avalanche's Multiverse incentives or Fantom's gas monetization can bootstrap early-stage ecosystems by sharing sequencer/MEV revenue with dApp builders. This is effective for attracting initial liquidity to a new L2 or appchain. However, for established DeFi, it can create misaligned incentives, potentially diverting focus from product-market fit to revenue optimization. Best suited for protocols where community ownership and equitable distribution are core values.
verdict
THE ANALYSIS
Final Verdict and Strategic Recommendation
Choosing between a Developer-Takes-All and a Shared Revenue model is a foundational strategic decision that defines your protocol's economic alignment and growth trajectory.
Developer-Takes-All models, exemplified by platforms like Ethereum and Solana, excel at attracting top-tier developer talent by offering them the full economic upside of their applications. This creates a fiercely competitive and innovative ecosystem, as seen in the explosive growth of DeFi protocols like Uniswap and Jupiter, which capture 100% of their fee revenue. The model's strength is its alignment with raw, permissionless innovation, but it can lead to extractive relationships where the base layer captures value primarily through congestion fees (e.g., Ethereum's base fee burn) without directly sharing in application success.
Shared Revenue models, pioneered by protocols like Avalanche Subnets and Cosmos app-chains, take a different approach by creating a symbiotic economic partnership. The base layer (or subnet) shares a portion of transaction fees or other revenues with the application, creating a powerful incentive for the platform to actively support the app's growth, security, and tooling. This results in a trade-off: while it may attract fewer speculative builders, it fosters deeper, more sustainable integrations, as demonstrated by the tailored infrastructure and dedicated validator sets for chains like dYdX v4 and Injective.
The key trade-off is between maximizing developer optionality and securing platform partnership. If your priority is unfettered innovation, complete ownership of your economic model, and competing in a high-liquidity environment, choose a Developer-Takes-All chain like Ethereum L2s (Arbitrum, Optimism) or Solana. If you prioritize aligned incentives, dedicated infrastructure support, and a cooperative path to scaling and security, choose a Shared Revenue model like an Avalanche Subnet or a Cosmos SDK chain. Your choice fundamentally dictates whether your relationship with the underlying infrastructure is transactional or strategic.
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