Definition ∞ Sponsored fees are transaction costs that are paid by an entity other than the direct user initiating the transaction. This model allows for certain users or applications to have their transaction fees covered, thereby reducing friction and encouraging participation in a network or service. It is a mechanism designed to subsidize activity and promote adoption.
Context ∞ The discussion around sponsored fees is currently prominent in the context of layer-2 scaling solutions and decentralized applications aiming to lower user entry barriers. Developers are exploring how to best implement these fee subsidies to encourage network growth without creating unsustainable economic models. Regulatory considerations and the potential for abuse of subsidized transaction costs are also subjects of ongoing debate.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
