Understanding Fees in Optimistic Ethereum: Part 1
As an Ethereum L2 at the tail end of a major L1 gas crisis, our most frequently asked questions are:
- How cheap ($) will transactions be on Optimistic Ethereum?
- What will determine transaction costs on Optimistic Ethereum?
Unsurprisingly, these answers are fundamentally related. In this post, we’re going to tackle question #1, sharing concrete figures for what fees users can expect in the near term. Question #2 is a bit more involved — we’ll be sharing more in an upcoming Part 2.
Our system currently reduces baseline user transaction costs by ~10x-50x. The table below lays out these savings by transaction type, which will improve substantially over time.
However, these baseline costs are just that — a baseline. Like with any chain, there are fundamental capacity constraints which must be controlled with variable cost. In Optimistic Ethereum, we target a gas limit with an EIP1559-style pricing mechanism. This means that if it experiences too much demand, the protocol will increase fees until transactions/day fall back under the limit. We will maintain control of the targeting algorithm at launch to test what real-world parameterization should be before enshrining it into the protocol.
Keeping OE safe and stable is our priority, so our congestion pricing will target 50,000 transactions/day on Uniswap launch and maintain a price floor of 1.5x the base L1 cost to the system (still 9x+ cheaper for the user). We’ll increase this 50,000 limit (which is already close to the daily volume of all of Uniswap on L1) up to theoretical system limits over time as the system proves to be secure in production.
As for question #2 — as it turns out, knowing what will drive fees on Optimistic Ethereum is important to us more than anyone. Without an understanding of the economics which shape how Optimistic Ethereum behaves, it could be easy to implement the wrong optimizations. Next week, we’ll dive into the fundamental drivers of fees, and how different architectural decisions affect them. Here’s a sneak peek for the adventurous. 😉