Status Network Unveils Gas-Free Ethereum L2 Solution for Sustainable Growth

In a recent AMA session, cyp, the project lead for Status Network, discussed the development of an Ethereum Layer 2 (L2) solution designed to prioritize sustainability and community-backed funding. The Status Network aims to operate gas-free, with a rate-limiting nullifier that provides each user a quota of free transactions, which resets over time. This approach ensures that regular users do not have to pay for transactions, addressing the issue of declining revenues from shrinking gas fees, which is a growing problem across Layer 1s and Layer 2s.

The network generates revenue from the yield of users’ assets deposited into the system. According to cyp, once the network reaches a Total Value Locked (TVL) of around $100-$200 million, operational costs will be entirely covered by this yield. Any surplus revenue is allocated back to the community, with 30% of the network’s gas revenue used for operations and 70% distributed to users via liquidity incentives or public funding.

Another key feature of the Status Network is revenue sharing from native applications, such as a decentralized exchange (DEX), a collateralized debt position (CDP) stablecoin, or a launchpad. These applications contribute to the network’s functionality by returning about 30% of their fees to the L2, which is then divided between operations and community rewards. This creates a sustainable loop where the growth of the ecosystem results in more value flowing back to the users.

Cyp highlighted games, particularly casual, mobile, and in-messenger games like Telegram Mini Apps, as a major use case for the Status Network. These apps can easily onboard users, providing them with free transactions from the start, which eliminates the need for preloaded wallets or reliance on risky paymaster accounts to subsidize gas. Other targets for the protocol include social apps and protocols like gasless DEXs and perpetuals platforms.

Status Network aims to offer community-based funding alongside traditional venture capital (VC) funding. Users can vote using their tokens to distribute funding based on the proportion of votes each option receives. This approach provides real value to users or apps, as they can receive ETH and stablecoins from the funding pool immediately. To prevent abuse and allocate funds more effectively, the ecosystem will adopt an epoch-based model with recurring funding rounds. Projects that become inactive will not continue to receive funds.

Streamable public funding is another solution being discussed, which provides money to teams over time with certain conditions. If milestones are missed or development stops, the stream can be cut off, and the funds will return to the public pool. This solution is currently being discussed with Superfluid.

With the Karma system, users can vote on how to allocate the total public funding pool. Karma is a nontransferable token that cannot be bought; it can only be earned by contributing to the network. Users can earn Karma by staking a utility token (SNT), providing liquidity to the network, and using the apps and games. This system acts as both a loyalty program and an onchain credit score, which could open the door to undercollateralized loans in the future.

Status Network is collaborating with Linea to develop additional features, including a gasless module, a yield-bearing bridge, and integrations with various data availability solutions for data blob storage. In October 2025, the network will begin a TVL pre-deposit campaign to initiate the public funding system, provide early liquidity incentives for the DEX, and support the L2’s operations. The mainnet launch is planned for Q1 of 2026.

Status Network’s overall goal is to support small, honest builders and active users while minimizing abuse and empowering community-driven growth. The network aims to create an L2 where anyone, from first-time wallet users to open-source developers, can plug in and get value.