Ethereum has made significant progress in becoming a more efficient data availability [DA] layer for roll-up, thanks to advancements like Dencun and EIP 4844. However, this transition brings its tradeoffs. As per Galaxy expert, Christine Kim, this shift comes at a cost to protocol revenue and has not entirely solved the issue of high DA costs for rollups.
These tradeoffs include a reduction in ETH’s share of rollup revenue. The report highlighted that total revenue earned is 69% below that of the average 150-day rolling sum before the upgrade; ETH burned is 84% below that of the average 150-day rolling sum before the upgrade. Secondly, the continued high costs for rollups using Ethereum’s data availability layer have become a nagging issue.
Before these changes, Ethereum captured a substantial portion of the value generated by rollups, reaching up to 77%. With the implementation of EIP-4844, this share has dropped significantly to 8% for optimistic rollups and 33% for ZK rollups. While this represents a notable improvement, Ethereum’s DA layer remains relatively expensive. Nevertheless, rollups face substantial costs, with average prices of $16,473 per gigabyte of blob data used and $12,458 per gigabyte purchased. These high costs are primarily driven by periods of increased demand, leading to surges in blob prices.
Ethereum Transaction Failure’s Main Culprit
Although activity on the leading L2s picked up immediately post-Dencun, the rise in transaction counts has been met with rising failure rates. The majority of the failed transactions arise from high-activity addresses, likely bots. Bots activity is further driven by low fees on L2s. “Average users who are not sending high volumes of transactions are experiencing failed transaction rates at a level only slightly more elevated than pre-Dencun levels,” per the report.
To further enhance Ethereum’s efficiency as a DA layer for rollups, the research analyst recommended that ETH undergo additional upgrades. This could involve exploring alternative consensus mechanisms, optimizing data storage and retrieval processes, or developing new economic models to incentivize efficient DA provision. By addressing these challenges, Ethereum can solidify its position as a cost-effective and scalable platform for rollups, fostering innovation and growth within the broader Web3 ecosystem.
