With the development of Ethereum, the application and benefits of Layer 2 (two-layer solutions) have become hot topics of discussion. Independent researcher Haotian made an in-depth analysis of the recent FUD (fear, uncertainty and doubt) sentiment towards Ethereum and the voice of Ethereum co-founder Vitalik Buterin. This article will start from data to discuss the current situation and future challenges of Ethereum Layer 2.
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ToggleCancun’s upgraded Layer 2 market expectations and reality
Haotian said that before the Cancun upgrade, the market was full of expectations for the Rollup as a Service (RaaS) and data availability (DA) wars.
The rapid growth of Layer 2 heralds an increase in the demand for Blobs space and triggers a price war, which in turn promotes the destruction of ETH, causing Ethereum to enter a deflationary stage and increase prices. However, the reality after Cancun's upgrade was not as expected. Although the Layer 2 infrastructure is in place, there are not actually as many developers as expected to compete.
Blobs space usage and Layer2 DA cost analysis
The utilization rate of Blobs space has not reached saturation, only about 80%. Layer2 can choose to use blobs in specific blocks and optimize usage by monitoring blob utilization in the current block. However, this dynamic adjustment also prevents panic demand (FOMO) from forming in the blob rate market.
Currently, the cost of DA for Layer 2 projects only accounts for 0.3% of its total revenue. Statistics show that the daily income of Layer 2 projects is about 500,000 US dollars, and the usage cost of Blobs space is very low. Although Layer2 still needs to pay other costs such as Sequencer server and Prover verification cooperation, the DA fee is relatively low, showing that the Cancun upgrade has been very successful in reducing rates.
Possible development direction of Ethereum Layer 2 ecosystem
Haotian said that in the short term, Ethereum's Rollup-centric strategy has been successful: DA costs have dropped, Layer 2 project burdens have been reduced, and users' gas fees at Layer 2 have dropped to an imperceptible range (0.001-0.01 US dollars), prompting more users to use Layer2 is the first choice for high-frequency trading. This means that Layer2 can become a pioneer in Ethereum, providing services with low fees, high experience and high TPS (transactions per second).
However, when Layer 2 transaction volume reaches exponential growth, the saturation problem of the Blobs space will become more prominent, and DA costs may increase significantly. Once DA costs account for more than 50%, some Layer 2 projects may withdraw from competition in the Blobs space and turn to third-party DA suppliers such as Celestia, or transform into Layer 3 or even Validium, making Ethereum's Rollup ecosystem more diverse.
Challenges and future development of Ethereum Layer 2
Haotian believes that currently, the usage and popularity of Ethereum Layer 2 has not reached expectations. One of the main reasons is that the Cancun upgrade has been too successful, resulting in unsaturated Blobs space usage and the fee market has not been activated. The final analysis of these challenges is that Layer 2 requires more users and a larger ecological scale. Despite this, the existing Layer 2 daily activity and revenue are still attractive, showing the partial success of the Layer 2 strategy in the short term.
Ethereum Layer 2’s strategy is being successfully implemented, but it faces the challenge of continued growth. In the future, with the growth of Layer 2 transaction volume and the gradual saturation of Blobs space, DA cost will become an important factor affecting the development of Layer 2. How to balance costs and competition and expand the Layer 2 ecosystem is the key to the future development of Ethereum.
