According to CoinDesk, Ethereum is experiencing a notable increase in the use of 'blob' technology, a data management tool introduced earlier this year. This trend indicates a growing adoption of layer-2 scaling solutions aimed at facilitating faster and more cost-effective transactions. The average number of blobs, or binary large objects, posted to Ethereum has consistently surpassed 21,000 this month, equaling the record activity observed in March, as reported by pseudonymous data analyst Hildobby on Dune Analytics.
Ethereum's Dencun upgrade, implemented earlier this year, introduced blobs to attach large data chunks to regular transactions. This method allows data to be stored off-chain, preventing congestion on the mainnet, unlike call data, which is stored permanently. Blobs can be likened to a large box filled with letters, where users pay for the entire box rather than each letter individually. The increase in blob usage highlights the rising adoption of layer-2 protocols such as BASE, Arbitrum, and Optimism. These protocols utilize blobs to bundle transactions, process them off-chain, and subsequently post them to the Ethereum main chain for verification.
Matthew Siegel, head of digital assets research at VanEck, noted on X that transactions for Ethereum and its layer-2 solutions are reaching all-time highs, with a 40% increase compared to the summer. Concurrently, the average blob count has risen by approximately 20%, driving layer-2 blob fees to a 30-day high. Blobspace, a designated area within Ethereum's blocks, temporarily hosts data from layer-2s, incurring costs based on network conditions. Blob fees, paid in Ethereum's native token ether, are burned like transaction fees, reducing the cryptocurrency's circulating supply. This contradicts the notion that layer-2 protocols are detrimental to the mainchain.
On Monday, the blob base submission fee surged to $80, the highest since March, while the average number of blobs per Ethereum block increased to 4.3. Notably, blob fees have burned over 166 ETH, valued at $560,000, in the past week, ranking as the ninth largest burn, according to ultrasound.money. Artemis highlighted in a newsletter that blob fees have historically been low since the implementation of blobs in EIP4844, as they have their own fee market that has largely not undergone price discovery. However, with the recent spike in on-chain activity, demand for blobspace on the L1 has increased, leading the blob fee market into price discovery.
The data suggests potential ether outperformance in the future. Ethereum, the second-largest cryptocurrency by market value, reached a four-month high of $3,546 on Monday, outperforming bitcoin's 5% decline, but has since retreated to $3,370, according to CoinDesk data.
