Ethereum’s Proposed Blob Expansion Falls Short of Meeting L2 Scaling Demands
As Ethereum’s layer-2 ecosystem continues its rapid expansion, analysts are raising concerns that the network’s planned blob capacity increases may prove inadequate to support projected transaction growth. Current scaling solutions, while innovative, face potential bottlenecks as adoption accelerates across major L2 platforms. Industry experts suggest that without more substantial infrastructure upgrades, Ethereum could encounter throughput limitations that may impact transaction costs and settlement times. This development comes at a critical juncture when competing blockchains are aggressively enhancing their scaling capabilities to capture market share in the multi-chain landscape.
Base as a case study
Base, Coinbase’s layer-2 blockchain, provides a tangible example of the opportunities and challenges inherent in Ethereum’s current model. Since its launch, Base has generated over $106 million in user fees, onboarded more than 155 million addresses, and bridged 1.9 million ETH, representing 1.6% of Ethereum’s circulating supply.
Applications operating on Base have accrued $768 million in cumulative fees, reflecting substantial user demand and network activity.
Since its inception, Base has also contributed approximately $4.5 million in blob and settlement fees to Ethereum’s layer-1 validators, highlighting the intended economic synergy between L2 growth and Ethereum’s revenue model.
However, despite Base’s success in expanding Ethereum’s reach, it also exemplifies the pressure placed on L1 infrastructure. Over the past six months, Base alone has averaged 93 transactions per second, a figure that, when multiplied across several scaling L2s, raises concerns about the sustainable allocation of blob space.
Although Base drives net-new demand for Etehreum and strengthens the broader network through applications and stablecoin growth, currently securing nearly $10 billion in total value, its scaling trajectory highlights the urgent need for Ethereum to maintain affordability and speed for end users across all L2s.
Outlook for Ethereum’s L2 strategy
The L2 roadmap represents a deliberate strategic pivot for Ethereum, moving toward a business model focused on security provision, settlement, and scalability services for external networks.
In this model, L2s such as Base could offload transaction activity from the mainnet while generating economic value through blob fees.
However, the report argues that this model’s success hinges on Ethereum’s ability to scale blob capacity without introducing prohibitive costs.
If scaling upgrades fail to keep pace with L2 adoption, Ethereum could face competitive pressure from alternative data availability solutions or even from competing L1s that can offer lower transaction costs at scale.
Current projections suggest that if transaction volume across major L2s expands dramatically without proportional upgrades to blob throughput, Ethereum will return to current fee levels on its base layer, negating the cost benefits intended by the L2 strategy.
Ethereum’s annualized revenue under a tenfold L2 scaling scenario would approximate $1.4 billion, roughly equivalent to its fee generation over the past year.
In summary, Ethereum’s capacity to support a flourishing L2 ecosystem depends on continuous technical progress and execution related to the mainnet.
Failing to expand blob space effectively could jeopardize its role as the backbone of decentralized applications and settlement for the next generation of blockchain infrastructure.
