Author: Donovan Choy
Translator: Bai Hua Blockchain
The operating cost of Ethereum L2 has always been extremely high, and L2 needs to pay millions of dollars in fees for the data availability of L1. All of this changed after the Dencun hard fork (EIP-4844) in March 2024.
The hard fork introduced a block space expansion called "blobs", allowing L2 to publish bulk data to L1 at an extremely low cost. The blob space has an independent fee market from L1, costing about one-tenth of the L1 block space, and has become a key component of Ethereum's Rollup-centric roadmap.
For example, according to data from TokenTerminal, Base's related fees reached $9.34 million in the first quarter of 2024, but plummeted to $699,000 in the second quarter and further dropped to $42,000 in the third quarter.
However, (bad news may be good news?) as on-chain activity increases in the bull market, the price of blob space has risen again.
Currently, each mainnet block is limited to a maximum of 6 blobs. When the blob usage reaches 50% (i.e., 3 blobs), a base fee will be introduced to regulate the demand usage of hundreds of L2s. When the usage reaches 4 blobs, the base fee will be further increased, and the next block may increase by up to 12.5%.
This is exactly what has started to happen in the past few weeks (see the chart below).
Source: Dune
In short, blobs are no longer free, and L2s need to start paying "rent". According to data from ultrasound.money, in the past 30 days, blob fees have burned about 212 ETH and brought significant blob fee revenue to the Ethereum mainnet.
Source: Blockworks Research
In summary, the introduction of blobs is a good thing: the operating costs of L2 have been reduced, which is undoubtedly a boon for L2 users.
However, some people (in other words, ETH holders) are not too satisfied, as L2 seems to be paying little fees to L1, which also means that the asset ETH is getting less value from it.
This dissatisfaction is mainly due to two pessimistic expectations, that the usage of blobs may not be enough to bring returns to L1:
1) L2 is essentially a commercial entity. They will choose cheaper data availability providers, such as Celestia or EigenDA, or even worse, a centralized data availability committee (DAC) with lower security.
2) When the blob market fee is high, L2 may delay the data payback to L1, as has been demonstrated in the past operations of Scroll and Taiko.
In the Devcon discussion on blobs, Ethereum researcher Ansgar Dietrichs acknowledged the misalignment of incentives for L2, but he argued that as more L2 networks form trust bottlenecks around Ethereum's data availability (DA), Ethereum's DA will become more important in the long run.
Tim Robinson of Blueyard proposed the view that "blobs are a draw strategy". He pointed out that although the current revenue from blobs is limited, due to its economic design, it will quickly generate huge value in the future, bringing rich returns to Ethereum. According to Robinson's blob simulator, assuming an Ethereum L1 that processes 10,000 TPS and has a blob size of 16 MB (currently blob size is 125 KB), it can burn 6.5% of ETH per year.
This is why blobs have fundamental benefits for Ethereum in the long run. Limiting the number of blobs or increasing blob fees to extract more value from L2 in the short term is actually a poor "rent-seeking" behavior.
Ethereum researchers are also actively supporting this view. In a recent Ethereum research paper released two days ago, Toni Wahrstätter called for conservatively increasing the number of blobs from 4/6 to a higher 6/9.
In ACDE #197, Vitalik also proposed to increase the blob space by 33% in the next Pectra hard fork. He warned that this adjustment is crucial, otherwise users may flow to other chains.
In summary, the complex debate around blobs boils down to a question: should Ethereum prioritize ordinary L2 users and their "Ethereum ecosystem-friendly" L2 systems, or prioritize the value accumulation of the ETH asset?
Ethereum researchers believe that overly emphasizing the latter may lead to users and developers flowing to cheaper chains, so they choose to continue expanding the blob space to pave the way for long-term development. However, this also impairs the attractiveness of ETH as an economic asset, causing short-term dissatisfaction among ETH holders.
In any case, this is a complex issue that requires accurate predictions of the future and weighing the possibilities of various "what-if" scenarios. Only time will tell which path is more correct.
Link to this article: https://www.hellobtc.com/kp/du/11/5546.html
Source: https://blockworks.co/news/ethereum-blobs-balancing-act
