Author: Tanay Ved & Matías Andrade Source: Coin Metrics Translation: Shan Ouba, Golden Finance
Key points:
Several Layer-2 solutions, including Arbitrum, Base, and Optimism, have adopted blob transactions, with more than 950,000 blobs published to Ethereum since EIP-4844 went live on March 13.
The adoption of blobs has significantly reduced the operating costs of Layer-2s, with the median blob fee having been reduced to a minimum of $0.0000000005, making user interaction more affordable.
The blob fee market adjusts dynamically based on demand, as in the case where subscriptions to blobs (“Blobscriptions”) pushed the average number of blobs per block up to the target of 3, temporarily pushing fees up to $27 before falling back to near $0.
Introduction:
EIP-4844 (dubbed “original-danksharding”) went live in March’s Ethereum Dencun upgrade, a major milestone for Ethereum’s rollup-centric roadmap. The upgrade aims to improve the scalability of Ethereum’s Layer-2 solutions and reduce transaction costs by optimizing how they clear transactions to Ethereum’s Layer-1. This is achieved by providing dedicated space for “blobs” (fragments of data) that L2 can use to settle transactions more cost-effectively. The ultimate goal is to expand the reach of the Ethereum ecosystem by making transactions more affordable and scalable.
In this week’s Coin Metrics “State of the Network” report, we provide a data-driven breakdown of Layer-2 blob usage and assess the success of Ethereum’s EIP-4844 upgrade.
What are Blobs, Sorters, and Data Availability Tiers?
As Ethereum has matured, it has transformed into a modular blockchain with various infrastructures working together to achieve its core functionality. Layer-2 constitutes a piece of infrastructure in Ethereum's stack that enables the network to scale. Over the past few years, a large number of Layer-2 solutions such as rollups (e.g. Base, Optimism, and Arbitrum) have emerged, with several more in development. These protocols rely on Layer-1 blockchains like Ethereum for data availability (storing/accessing transaction data) and ensuring the settlement of transactions through participants called sorters, which order and batch transactions to Ethereum L1. However, the costs associated with these operations are still high for Layer-2s.
This is where EIP-4844 comes in. The upgrade introduces a new transaction type with blobs, temporary packets of data that L2s can use for cost-effective settlement. Blobs are made available to L2s for approximately 18 days - unlike calldata which was previously stored permanently in Ethereum blocks. The ephemeral nature of blobs allows them to be sold cheaply, significantly reducing L2s storage and data costs.
In the previous sections, we will understand the impact of EIP-4844 on Ethereum’s L2 ecosystem and its economics.
Adoption of Blob Transactions
Since launching on March 13, several L2s have started adopting blob transactions, starting with zkSync, Starknet, and Optimism. Since then, over 950K blobs have been posted to Ethereum, with 450K transactions carrying blobs. On average, this equates to 10K blobs per day for most of April, with this number increasing to 17K recently as more Layer-2s come on board and adopt blobs.
Each blob-carrying transaction can contain up to 6 blobs, each storing 128KB of data. As Layer-2 rollups increasingly adopt this dedicated space to publish large amounts of data, blob space utilization is expected to increase. So far, a total of 125B bytes of blob space has been used, so blob size is growing relative to the total block size (in bytes). This suggests that L2 is moving away from calldata and toward more efficient forms of data storage. Crucially, blobs are designed to expire after 4096 epochs (about 18 days), providing rollups with enough time to retrieve necessary data while preventing permanent storage bloat on the Ethereum network.
After excluding the impact of inscriptions, Layer-2 adoption of blob storage and blob transactions has remained relatively stable. While Coinbase’s Base maintains the largest portion of blob sizes and blob transactions, Arbitrum’s impact has clearly grown. As rollups increase in number and use blobs, the number of transactions is expected to continue to increase. Overall, the adoption of blobs is a positive sign that EIP-4844 is achieving its goals of reducing data storage overhead and enhancing the scalability of Layer-2 solutions.
Impact of Blob Fees and Costs
Adopting this efficient storage and transaction type brings significant operational cost reductions to L2's. When L2 sorters batch and submit blobs to Ethereum L1, they incur a fee, which is a cost to L2. While weekly fees associated with Arbitrum, Base and Optimism sequencers rose to $700K in April due to the surge in inscription blobs, the cost spent on blob space has dropped to $0.00002.
The increased cost efficiency of L2s has translated into extremely low fees for end users. Currently, the median blob fee is as low as $0.0000000005, a significant drop from a peak of $27, while the total amount paid for blob space is close to $0.000008. Ultimately, this makes user interactions such as token transfers between wallets, asset swaps on a DEX, or other smart contract operations much more affordable.
Inscription and Blob Fee Market
EIP-4844 introduces a new transaction type and a new fee market for pricing blobs, which is designed to function similarly to the fee market of EIP-1559. In this new system, the blob base fee is dynamically adjusted based on the supply and demand of blob space within each block.
The blob pricing mechanism works according to the following principles:
1. The blob base fee will increase if the number of blobs in a block exceeds the current target of 3. This is to avoid overuse of blob space and keep supply and demand balanced.
2. If the number of blobs in a block reaches the target, the blob base fee remains unchanged. This indicates that the supply and demand of blob space have reached a balance.
3. If the number of blobs in a block is below the target, the blob base fee is reduced. This encourages greater use of blob space when it is underutilized.
These price dynamics ensure that the blob fee market is able to adapt to changes in demand for blob space, maintaining a stable and efficient fee environment for Layer-2 solutions and users.
As shown in the chart above, average daily transaction fees increased significantly to $27 in April as the average number of blobs per block exceeded the target. This increase can be attributed to a surge in inscription blobs (“Blobscriptions”). An inscription is a form of text, image, or other media embedded in a block — or in this case, a blob. From late March to early April, the daily number of blobs with inscriptions rose to a high of 13K, accounting for over 61% of all blobs. However, since then, the occurrence of Blobscriptions has decreased, driving blob fees back down to nearly $0.
This scenario illustrates how network congestion or high demand for blob space can impact blob pricing. While the current blob target per block may increase in the future, monitoring the above conditions is key to understanding how blob fee dynamics change, especially as the L2 market continues to expand and become more competitive. Blobscriptions may be a temporary phenomenon now, but as more L2s utilize blobs to meet their scaling needs, congestion will likely reappear.
in conclusion
EIP-4844 has successfully increased adoption of L2 through blob transactions, reduced Layer-2 operational costs, and made transaction fees more affordable for users. However, challenges such as fragmentation across assets, liquidity and user experience in Layer-2 solutions, and the need for decentralized sequencers remain. Solving these issues is critical to the continued growth and success of Ethereum's Layer-2 ecosystem, making transactions scalable and cost-effective while maintaining security and decentralization.
Network Data Insights
Summary
Transfer value (adjusted) on the Bitcoin network increased by 45%, while transfer value on the Ethereum network decreased by 26%. This week, Bitcoin active addresses decreased by 6%, while Ethereum active addresses decreased by 10%.
