Funding, Games, Stablecoin, DEX

In a recent Coinpectra AMA, Status Network project lead cyp discussed an Ethereum L2 designed to prioritize sustainability and community-backed funding.

“As long as people don’t spam it, the Status Network runs gas-free,“ he said. “We’ve built in a rate-limiting nullifier that gives each user a quota of free transactions. That quota resets over time, so regular users won’t have to pay anything.“

This approach bypasses the issue of declining revenues from shrinking gas fees, which is a growing problem across L1s and L2s. Instead, Status Network uses the yield from users’ assets deposited into the system. According to the speaker, once the network reaches a TVL of around $100-$200 million, operational costs will be covered entirely by yield.

“Anything above that is surplus that we can give back to the community. Overall, 30% of the network’s gas revenue is allocated for operations, and 70% is distributed to users via liquidity incentives or public funding,“ he added.

Another key feature is revenue sharing from native applications, like a DEX, CDP stablecoin or launchpad. Each of these applications helps the network stay functional by returning about 30% of its fees to the L2, and this income is divided between operations and community rewards. “The whole idea is to create a sustainable loop where the more the ecosystem grows, the more value flows back to the users,“ cyp emphasized.

He sees games, especially casual, mobile and in-messenger ones like Telegram Mini Apps, as a major use case for the Status Network. With Status Network, apps can easily onboard users, providing them with free transactions from the start, which eliminates 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 perps platforms.

Good Karma for good deeds

“VCs provide capital, but they also hold all the power. That’s why we decided to offer community-based funding alongside VC,“ said cyp.

Status Network users can vote using their tokens. Based on the proportion of votes each option receives, funding is distributed accordingly. “Instead of typical governance or utility tokens, users or apps are going to be able to receive ETH and stablecoins from the funding pool. That’s real value, and it’s immediate,“ the speaker highlighted.

To prevent abuse and allocate funds more effectively, the ecosystem will adopt an epoch-based model. “There will be recurring funding rounds, like every month or two. This way, projects that disappear or become inactive won’t continue to receive funds,“ said cyp.

He also discussed streamable public funding, which provides money to teams over time with certain conditions. “If you miss milestones or stop building, the stream can be cut off, and the funds will go back to the public pool.“ The solution is currently being discussed with Superfluid.

With Karma, users can vote on how to allocate the total public funding pool. “You can vote to direct revenue streams to a protocol, a team, or even a multisig wallet,“ he explained.

As a nontransferable token, Karma cannot be bought; it can only be earned by contributing to the network. “We’ve thought a lot about how to prevent whales from taking all the yield. So Karma is earned in three ways: staking a utility token (SNT), providing liquidity to the network, and actually using the apps and games. Not easy for whales to do all three at once,“ said cyp.

The Karma system acts as both a loyalty program and an onchain credit score, which could open the door to undercollateralized loans in the future. “If someone has a high Karma score, they’re proven contributors. So why not let them access small loans without needing full collateral?“ he noted.

Preps for mainnet launch

The speaker also provided insights into the protocol’s behind-the-scenes activities, such as collaboration with Linea. Together, they’ve been developing 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. This leads into the planned mainnet launch in 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. “We want an L2 where anyone, from first-time wallet users to open-source developers, can plug in and get value,“ cyp concluded.

Explore Status Network in detail

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