Ethereum Layer 2 scaling solutions are nearing a critical juncture, warns Gautham Santhosh, co-founder of Polynomial.fi. These protocols, designed to enhance the scalability and reduce the transaction costs of the Ethereum mainnet by handling transactions off-chain, are becoming increasingly popular among users seeking faster and cheaper transactions. However, the surge in demand is pushing these solutions to their limits, with the average number of binary large objects, or blobs, hitting a daily record of 21,000 since November, as revealed by data analyst Hildobby's Dune Analytics dashboard.
The pressing concern is that just two Layer 2 protocols, Coinbase's BASE and World Chain, currently consume 55% of the daily blob activity. This concentration suggests that a continued appetite for Layer 2 solutions could rapidly exhaust the available capacity. As Santhosh stated on X, "Ethereum L2s are about to hit a brick wall. 55% of all blob space is already consumed by just 2 chains. And at current growth rates, we're only months away from everything breaking."
Blobs operate similarly to regular transactions, yet they include an additional data piece, and crucially, don't permanently take up mainnet space—lasting only 18 days. These blobs allow Layer 2 protocols to group transactions together, process them off-chain, and subsequently post them on the main chain for verification. Each block is limited to six blobs, with a target of three. Upon reaching this target, a base fee is levied to regulate demand.
Since November, the high demand for blobs has consistently met the three-blob target, leading to heightened base fees due to intense competition among Layer 2 protocols.
"It's like having a highway with only 3 lanes for 50 growing cities," Santhosh commented. Base submission fees have notably increased since November, sometimes exceeding $50. These spikes often coincide with market hours, airdrops, and when new Layer 2 solutions are launched, resulting in higher costs for users.
"This impacts everyone," Santosh remarked, noting that decentralized exchanges are experiencing increased trading costs, perpetual protocols face surging base fees, and users see rising expenses for routine transactions. "At @polynomialFi, our base fees have surged by 300% in recent months." According to pseudonymous Base builder Jesse.base.eth, the spike in blob base fees is hindering the growth of Layer 2s. "Cyclical price spikes driven by daily demand cycles highlight this issue.
More blobs are needed immediately to ensure all L2s can continue scaling and maintain Ethereum's onchain centrality," Jesse mentioned on X.
Ethereum's Pectra upgrade, expected in March 2025, plans to increase the blob limit per block to nine, with a target of six. However, Santhosh cautions that this expansion would only provide a short-term reprieve, extending the capacity by months rather than years.