Ethereum Layer 2 scaling solutions may soon reach their limits in scaling efficiently on the mainnet, warned Gautham Santhosh, co-founder of Polynomial.fi.
Layer 2 solutions are protocols or networks built on top of a layer-1 network to improve its scalability and reduce transaction costs by processing transactions off-chain and then time fixing the results in the main chain. More and more users embraced these protocols for faster and more affordable transactions late last year.
That is evident in the increasing number of blobs or binary large objects posted by hundreds of L2s on Ethereum. Since November, the daily tally has averaged a record 21,000, according to the pseudonymous data analyst Hildobby’s Dune Analytics Dashboard.
Here is the relevant part. Just two Layer 2s – Coinbase’s BASE and World Chain – account for 55% of daily blog activity. Thus, the constant demand for Layer 2 can quickly exhaust the available capacity.
“Ethereum L2 is about to hit a brick wall. 55% of all blob space is already consumed by 2 chains. And at current growth rates, we’re only a few months away from breaking it all,” said Santhosh in X.
Blobs are like regular transactions with an additional piece of transaction data attached. However, unlike traditional transactions, blob-bearing transactions do not permanently occupy mainnet space and are only available for 18 days. Layer 2 protocols use blobs to bundle transactions, process them off-chain, and post them to the main chain for verification.
The blob limit per block is six, with a target of three. When the target is reached, a base fee is charged to adjust the demand from the L2s.
Since November, demand for the drops has been so high that the target of three has been consistently met. In other words, L2 scores compete for the per-block target, driving higher base fees.
“It’s like having a highway with only 3 lanes for 50 growing cities,” Santhosh said.
The chart shows that the base submission fee has been noticeably higher since November compared to previous months, occasionally topping the $50 mark.
They typically increase during market hours, airdrops and when a new layer 2 solution goes live, leading to higher user costs. “It’s hitting everyone. DEXs are seeing higher trading costs, perp protocols are facing base fee increases, users are paying more for basic transactions,” explained said Santosh. “In @polynomialFiour base fees have increased 300% in recent months.”
According to the pseudonymous Base builder Jesse.base.eth, the spike in blob base fees is hindering the growth of L2.
“You can see this in cyclical price increases driven by daily demand cycles. We need more blobs as soon as possible to help all L2 continue to scale and ensure @ethereum is the center of onchain,” Jesse said to X.
Ethereum’s Pectra upgrade, slated for March 2025, is expected to raise the blob limit per block to nine, with a target of 6. But, according to Santhosh, the capacity doubling “just bought us months, not years.”
