Post EIP-4844 — The Primary Factors Impacting Gas Fees on Layer 2 Blockchains

As developers continue to explore the myriad use cases of blockchain technology and innovate with decentralized applications (DApps), they encounter a fundamental friction of the ecosystem: gas fees. Akin to transaction fees in traditional finance, blockchain users incur gas fees to process and validate transactions. Although these gas fees help maintain network security and incentivize network participants, they also pose challenges for developers interested in creating efficient and sustainable scaling solutions.

Why are gas fees important considerations for developers and blockchain participants alike? Most importantly, they directly impact the cost of deploying and executing smart contracts, which power decentralized projects[1]. If developers want to attract and maintain a robust user base on a given blockchain and stay competitive, they must minimize gas fees. It is therefore important for developers to understand the primary factors that impact gas fees on Layer 2 (L2) protocols so they can better anticipate both short-term and long-term price shifts and adjust accordingly.

In this research report, we look at how the recent live proto-danksharding (EIP-4844), zero-knowledge proof (ZKP) rollups, and optimistic rollups have impacted gas fees using real-world examples of L2s functioning on the Ethereum blockchain.

Proto-DankSharding (EIP-4844)

Protocol sharding is a common technique that splits a blockchain network into smaller subsets (known as “shards”), thus increasing its processing capacity because each shard can complete transactions independently from one another[2]. Ethereum’s recent live proto-danksharding (EIP-4844), however, introduced a transformative means of achieving similar aims without having to split the main network[3].

How does this work? Previously, Ethereum-based rollups had to process transactions directly within their L2 protocols, then prove transaction validity on the Ethereum mainnet. Consequently, most transaction history was permanently stored on Ethereum using calldata. Proto-danksharding reduces the burden of the Ethereum mainnet by processing rollup transactions in a read-only format, without needing to store the data itself. This process is known as blob-carrying transactions, which replaces calldata with a new type of data called blobs[4]. It is therefore expected that the proto-danksharding parallel architecture would boost efficiency of a given blockchain ecosystem and reduce gas fees.

Ethereum’s Dencun upgrade on March 13, 2024 introduced proto-danksharding, which significantly affected gas fees on many L2s[5]. The below chart shows median gas fees on an hourly basis for several L2 protocols, including ZORA, Base, scroll, zkSync, and OP Mainnet before and after Dencun.

The most obvious shift occurred on ZORA, where median gas fees plummeted after Ethereum’s upgrade. Median gas fees have risen slightly since then, but have not returned to the same levels as March 12, 2024. It is interesting to note that median gas fees increased on ZORA and OP Mainnet on March 27, 2024, which was triggered by a blob fee surge on the Ethereum mainnet[6].

On the contrary, median gas fees on Base have been uptrending, likely due to the network’s L2 fee increase for blob inscriptions — this suggests that blobs can only make transaction processing more efficient when there is legitimate network congestion. As we see in the below chart, gas fees on Base have spiked above a median fee of $1 on several days and even surpassed a median fee of $6 on March 26, 2024.

The above results suggest that EIP-4844, as well as other upgrades to the Ethereum mainnet, have impacted and will impact L2 protocols in different ways, depending on their unique functioning capabilities. In the next section, we will explore in detail how zero-knowledge proof (ZKP) rollups and optimistic rollups were impacted by Dencun.

Zero-Knowledge Proof (ZKP) Rollups vs. Optimistic Rollups

Zero-knowledge proof (ZKP) rollups and optimistic rollups are both popular L2 scaling solutions on the Ethereum blockchain, but employ different approaches.

ZKP rollups utilize ZKPs to validate transactions, allowing protocol participants to prove that a statement related to a transaction is true without revealing information beyond the validity of the statement itself. Due to this essential feature, L2 protocols powered by ZKPs may incur lower gas fees than other protocols[7].

ZKP rollups can also impact gas fees in other ways:

• Their ability to simultaneously verify proofs without additional computational costs may lower gas fees[8].
• Certain ZKPs may introduce fees associated with computation and communication. The more complex they are, the higher the gas fee.

On the other hand, optimistic rollups assume by default that protocol participants will transact honestly. These protocols compute most transactions off-chain instead of directly on Ethereum and only review activity if there is evidence of fraud[9].

Here’s how optimistic rollups may impact gas fees:

• Since most transactions are processed off-chain, they do not incur the gas fees associated with Ethereum itself[10].
• Transactions are often bundled into combined rollup submissions, reducing the number of operations, and thus reducing associated gas fees[11].
• In certain instances, gas fees might increase due to operational costs associated with off-chain data availability.
• If a transaction causes a dispute or unexpected challenge, gas fees may also increase.

To determine how EIP-4844 has impacted ZKP rollups and optimistic rollups, we looked more closely at gas fee activity on zkSync (a ZKP rollup) and OP Mainnet (an optimistic rollup).

Let’s first break down the L1 processing costs for zkSync, or the fees that zkSync spends to post transactions on Ethereum. Before Ethereum’s Dencun upgrade, the average calldata costs on zkSync ranged from below $30 per transaction to above $120, which is shown by the blue line. After the upgrade, the average costs dropped to below $10, as shown by the red line.

The average ZKP size on the network also declined, but the shift was not as dramatic.

The impact on the average cost in USD to verify transactions on the Ethereum mainnet is similar.

When comparing the L1 costs for zkSync and OP Mainnet, we see that average consumed fees do not vary significantly and both declined following Dencun.

However, the average gas fee for L2 consumption illustrates a stark difference between the two networks. The cost on zkSync has been historically lower than the cost for Optimism, suggesting that zkSync has made various adjustments on an L2 basis.

Finally, it is interesting to examine how gas fees on OP Mainnet have changed for different transaction types before and after EIP-4844. In general, transactions with complicated smart contracts and smaller calldata size — for instance, perpetual swap contracts — are likely to not be significantly impacted by the upgrade[12].

How EIP-4844 Has Impacted Top Ethereum L2 Rollups

As of April 5, 2024, most of the top L2 rollups (ranked by total value locked) have experienced significant reductions in L1 calldata costs.

A closer look at the average calldata costs and average L1 costs on L2 rollups reveals that most have also experienced reductions.

Other Shifts in Transaction Posting and Blob Data

Since Ethereum’s Dencun upgrade, there has been a general decrease in transaction posting from L2s to the Ethereum mainnet (with the exception of Mode, as shown below), leading to longer periods before transactions are finalized. This shift raises questions about the impact on security, as longer finality times may affect Ethereum’s overall robustness.

Additionally, the current limit of blob per block on Ethereum is 6 (shown by the red line in the below chart), which exceeds the target of 3 (shown by the blue line)[13]. Akin to the impacts of EIP-1559, a number higher than three will result in higher gas fees, which may impact certain L2 rollups more than others[14]. Between March 29, 2024 and April 5, 2024, average blobs per block in one hour remained close to the target with prices declining on April 4.

The distribution of blob submitters for L2s including zkSync, OP Mainnet, Base, Arbitrum, and more, has also experienced shifts since Ethereum’s Dencun upgrade.

We also examined the impact on blob economics for several L2 rollups, measured in ETH. Certain L2s, such as Base, do not appear to have been significantly impacted, whereas Linea has experienced a substantial increase.

The Future of Gas Fees on Ethereum

As blockchain technology becomes more efficient and more widely-adopted, it is likely that the Ethereum network will continue to undergo changes, including protocol upgrades and advancements in L2 rollups. Although EIP-4844 aims to optimize gas fees and improve network efficiency, it is clear that it has also introduced new considerations.

The impact of future solutions on the Ethereum network and L2 rollups will vary, and market cycles may also play a role in shaping gas fee dynamics in both the short term and the long term. Many L2 protocols have not yet opted into EIP-4844 and there are many more L2s in development; this may increase competition for future players in the network. Ultimately, gas fees will depend on the intersection between technological innovations, market dynamics, and the needs of users and developers.

References

1. Ethereum Foundation. “Gas | ethereum.org.” Ethereum.org, https://ethereum.org/en/gas/.
2. Hertig, Alyssa. “What Is Sharding?” CoinDesk, https://www.coindesk.com/learn/what-is-sharding/.
3. Buterin, Vitalik. “EIP-4844.” EIP-4844, https://www.eip4844.com/.
4. Buterin, Vitalik. “Blob Transactions.” Ethereum Notes, https://notes.ethereum.org/@vbuterin/blob_transactions.
5. Ethereum Foundation. “Decentralized Uncensorable Names (DENCUN).” Ethereum.org, https://ethereum.org/en/roadmap/dencun/.
6. Kubenic, Jack. “Ethereum’s Blob Base Fee Surges as Miner Revenue Spikes.” Blockworks, https://blockworks.co/news/ethereum-blob-base-fee-surges.
7. Cryptoslav, Ivan. “Optimistic Rollups vs. ZK Rollups: The Ultimate Comparison.” CoinMarketCap Academy, https://coinmarketcap.com/academy/article/optimistic-rollups-vs-zk-rollups-the-ultimate-comparison.
8. KuCoin Learn. “Zero-Knowledge Proof (ZKP) Explained.” KuCoin Learn, https://www.kucoin.com/learn/crypto/zero-knowledge-proof-zkp-explained.
9. Ethereum Foundation. “Optimistic Rollups.” Ethereum.org, https://ethereum.org/en/developers/docs/scaling/optimistic-rollups/.
10. GasFees.org. “What Are Optimistic Rollups? Gas Fees Explained.” GasFees.org, https://gasfees.org/what-are-optimistic-rollups-gas-fees/.
11. Stevens, Robert. “What Is Optimism? Using Rollups to Help Scale Ethereum.” Decrypt, https://decrypt.co/resources/what-is-optimism-using-rollups-to-help-scale-ethereum.
12. Sergeenkov, Andrey. “What Is a Perpetual Swap Contract?.” CoinDesk, https://www.coindesk.com/learn/what-is-a-perpetual-swap-contract/.
13. Kellerman, Bert. “EIP-4844: Blobs and Blob Gas — What You Need to Know.” Blocknative, https://www.blocknative.com/blog/eip-4844-blobs-and-blob-gas-what-you-need-to-know.
14. Buterin, Vitalik; Conner, Eric; Dudley, Rick; Slipper, Matthew; Norden, Ian; Bakhta, Abdelhamid. “EIP-1559: Fee market change for ETH 1.0 chain.” Ethereum Improvement Proposals (EIPs), https://eips.ethereum.org/EIPS/eip-1559.

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