Blobspace: How to Use L2s to Save Money on Gas Fees
A key innovation in the Dencun update is the introduction of ‘blobs’, designed to enhance Ethereum’s scalability. This new feature optimizes the management of Layer 2 data while significantly reducing associated fees.
Ethereum’s widespread popularity and monolithic architecture have led to scaling challenges, resulting in high gas fees that increasingly prevent the average user from utilizing the network.
Exorbitant fees for small transactions during peak network demand can deter the use of decentralized finance (DeFi) protocols, such as non-custodial ETH staking, and discourages broader adoption of Ethereum.
Here, using Layer 2 solutions stands out as an effective strategy to reduce transaction fee costs, especially when it comes to avoiding the high fees associated with block space on Layer 1.
Ethereum underpins a digital economy aimed at democratizing access to trustless financial services for all, not just large-scale investors. Therefore, it is counterproductive to alienate or make the network prohibitively expensive for average users.
Enter Blobs: Scaling with Rollups & L2s
As we mentioned in a separate article, Dencun marks the beginning of the Surge phase of Ethereum’s roadmap aligned with the explicit goal of scaling Layer 2 (L2) accumulators to achieve better transaction throughputs (TPS).
EIP-4844, also known as Proto-danksharding, drives the optimization of L2 cumulative data usage through a new data type called ‘Blobs’, an acronym for Data Binary Large Objects. Blobs handle large-scale storage on the Ethereum blockchain for things like documents, multimedia files, and various forms of structured or semi-structured data.
In a nutshell, post-Dencun, the storage of L2 transactions in L1 in the CALLDATA field is replaced by blobs through a “blob-carrying” transaction that increases the space of each block by up to 2MB.
With this improvement, it is no longer necessary to permanently store Layer 2 transaction data on Ethereum Layer 1, thereby bypassing the data availability (DA) costs on L1. This is because blobs only store data temporarily, ensuring its availability to validators for just a brief period.
Saving on gas fees using L2s
The implementation of proto-danksharding by various protocols or Layer 2 (L2) solutions has reduced transaction fees significantly, with savings of up to 80% on most major rollup-centric solutions.
These savings are possible because the burden of storing transaction data is substantially reduced. Blobs are never sent to the Ethereum Virtual Machine (EVM), and non-blob transactions on the core network do not impact the gas costs of blobs.
Unlike L1s which charge fees for the computation required for transactions and long-term storage for data availability, L2 rollups charge much less for computation and storage. However, it is important to note that L2s charge more for the input data that must be published to the L1.
Layer 2 Solutions
Currently, there are several Layer 2 (L2) solutions aimed at scaling Ethereum, with optimistic rollups and zero-knowledge rollups (zkRollups) being the most prominent.
(It is worth mentioning here, but outside the scope of this post, that Validiums and sidechains are alternative options that are also currently available for scaling Ethereum.)
It should be noted that rollups operate on a couple of basic principles:
- All input data is published, allowing anyone to read it.
- Anyone can “blow the whistle” if they see the chain doing something it shouldn’t be.
These confidence assumptions are the basis for the operation of rollup solutions like Arbitrum, Optimism, Polygon zkEVM, Base, and zkSync.
The critical aspect to note with optimistic rollups is that while withdrawals from Layer 1 (L1) to Layer 2 (L2) are immediate, the reverse process is not. This is due to the “fraud proofing” window, or waiting period of typically at least a week, that allows for the reversal of transactions if irregularities are detected and verified on the chain.
On the other hand, Zero-Knowledge-based Layer 2 solutions such as zk-Rollups work by transferring transaction batches from Layer 1 to Layer 2 by creating a “proof of validity” for each batch. Unlike optimistic rollups, they do not require fraud challenges which enables fast but more costly transactions, although they are still less than the fees on Ethereum L1.
Some examples of Zero-Knowledge-based Layer 2 solutions are Loopring, StarkNet, Scroll, and Linea.
How to use L2 solutions to save on Ethereum transaction fees
Saying goodbye to high fees and slow transactions on Ethereum may have been somewhat difficult in the past, but now with Layer 2 solutions gaining more and more traction, it is a reality that is attracting more and more users.
Since the application of these protocols is nearly identical across different solutions, we will concentrate on the market leader, Arbitrum, to illustrate the steps involved in reducing gas fees using Layer 2 solutions.
- Choose the L2 that best fits your needs
As noted above, cumulative packages have lower fees (~40,000 gwei) but transactions do not become final until the end of the fraud challenge period.
On the other hand, ZK-rollups finalize transactions almost immediately, but users pay a higher price (~500,000 gwei).
2. Configure your Ethereum wallet to work with the L2
Once you have chosen an L2 solution, to use it, you must configure your wallet with the network data. Users can research the technical documentation or utilize a site like Chainlist to gather and add the following data for the target network:
- Network name
- RPC URL
- Chain ID
- Currency
- Explorer
3. Bridge some ETH to the L2
In addition to configuring your wallet, you must also bring enough ETH to pay fees and interact with the application or protocol to use it. When ETH is sent from Ethereum Layer 1 to an L2, it is called “bridging.”
There are three ways to bridge ETH to an L2:
- The easiest and most direct way is to acquire ETH in a CEX with withdrawal support for the L2 you choose.
- Use the official bridge of the L2 solution. In the case of Arbitrum, you would use the Arbitrum Bridge.
- Use a third-party multi-chain bridge.
4. Verify the bridge transaction
Remember that the transaction from L1 to L2 is almost immediate and sometimes at a cost of almost zero. To make sure that your transaction has been successfully executed, you can use a block explorer such as Etherscan. Simply enter your wallet address and verify your assets have successfully arrived at the L2.
5. Use the L2 solution
With your funds available on the L2, you can start interacting with thousands of core Ethereum applications that popular Layer 2 solutions like Arbitrum, Loopring, and Optimism support.
With these protocols, you can do anything possible on Ethereum L1, with the added benefits of significantly lower costs and higher speeds, without compromising security.
You can also withdraw your funds from the L2 to Ethereum L1 at any time, even if the L2 protocol ceases to exist. Unlike sidechains, L2 solutions like Optimism and Arbitrum operate on top of L1, inheriting Ethereum’s robust custodial security.
Final Thoughts
The market for Layer 2 solutions on Ethereum has been growing steadily with Dencun and Proto-danksharding solidifying their value for users of the network with significantly lower gas fees.
Currently, the L2 market amounts to around $38.61B with Arbitrum, Optimism, and Base collectively comprising 74.4% of the total L2 market share.
Layer 2 scaling solutions provide an environment as secure as Ethereum at a fraction of the cost, and are a crucial part of Ethereum’s roadmap dedicated to driving a more efficient economic model while final scaling on the network is completed over the years.
If you are an active DeFi user, consider using an L2 solution to save on gas fees for lower value transactions. However, if you need to exchange large amounts of money, keep in mind that the cost of a transaction on L1 is likely to be negligible given the total amount of the transaction, and the work involved to do it on an L2 may not be worth the savings.
At Safestake, we are keenly aware of the importance of L2 solutions and the leading role they will play in maximizing profits for our users in phase 2 of our mainnet that will feature liquid staking through our proprietary pool.
About SafeStake
SafeStake is a pioneering technology company focused on revolutionizing Ethereum staking. With its cutting-edge, decentralized Distributed Validator Technology (DVT), SafeStake provides an ultra-secure, fault-tolerant environment for Ethereum validators, maximizing staking rewards and minimizing penalties. SafeStake is committed to driving the growth, innovation, and decentralization of the Ethereum network while ensuring the security and prosperity of its participants.
