Ethereum (ETH) is facing scalability constraints that could hinder the growth of layer-2 (L2) networks and lead to transaction bottlenecks, as highlighted in a recent report by The DeFi Report. The limited blob space on Ethereum could result in increased costs and hinder the network’s scaling roadmap as L2 networks scale user adoption and transaction throughput. Although Ethereum supports L2s through blobs, the current capacity may not be enough to sustain rapid L2 expansion, even with the upcoming Pectra upgrade.
Simulations indicate that a 10x increase in transactions per second across major L2s like Base, Arbitrum, and Optimism could drive transaction fees to unsustainable levels. Planned upgrades, such as PeerDAS and Fusaka, aim to expand blob capacity further, but projections suggest that Ethereum may need to support at least 33 blobs per block to keep L2 transaction costs below $0.02. Without these upgrades, Ethereum could face congestion that threatens the viability of the L2-centric scaling strategy.
Base, Coinbase’s layer-2 blockchain, serves as a case study for the challenges and opportunities within Ethereum’s current model. Base has been successful in generating user fees, onboarding addresses, and bridging ETH, contributing to L1 validators’ revenue model. However, the significant transaction volume on Base highlights the pressure on L1 infrastructure, underscoring the need for Ethereum to maintain affordability and speed for end users across all L2s.
The L2 roadmap represents a strategic pivot for Ethereum towards providing security, settlement, and scalability services for external networks. L2s like Base can offload transaction activity from the mainnet and generate economic value through blob fees. However, the success of this model depends on Ethereum’s ability to scale blob capacity without introducing prohibitive costs. Projections suggest that without upgrades to match L2 adoption, Ethereum could face competition from other solutions offering lower transaction costs.
In summary, Ethereum’s ability to support a thriving L2 ecosystem relies on continuous technical progress and execution related to the mainnet. Failing to expand blob space effectively could jeopardize Ethereum’s role as the backbone of decentralized applications and settlement for the next generation of blockchain infrastructure. The DeFi Report emphasizes the importance of addressing scalability constraints to sustain the growth of L2 networks and avoid future transaction bottlenecks on Ethereum.
