Ethereum’s Scalability Contest: Layer-2 Solutions and the Turning Tide of Gas Fees

Sundrenched, retro-themed simulation of Ethereum network with ethereal blues and soft golds. Picture layers upon layers, representating layer-2 solutions easing traffic, glowing with vibrant pulses of data transfers. Ethereum symbol as the sun casting long shadows. Echo peace and relief capturing eased congestion, yet maintain an edge of intrigue.

The troubled waters of Ethereum’s congestion problem might just be experiencing some calming waves. Those behind Ethereum’s development, including the likes of Vitalik Buterin, have long touted the potential of “layer-2” projects. These supplemental systems situated over the primary blockchain are designed to facilitate speedier, and consequently more affordable transactions, ultimately alleviating traffic on the main network.

The case study that seems to spotlight the possible effectiveness of this blueprint is the recent deployment of a layer-2 project, Base, from the US crypto exchange Coinbase. Over the past few weeks, Ethereum, which saw its gas fees soar to a yearly high in May due to a meme-coin frenzy, has observed significant fee drops. Analysts have suggested the upsurge of layer-2 solutions as the likely cause, thereby presenting the benefits of the scaling architecture.

A testament to this is the unexpectedly quiet performance of Ethereum’s gas fees despite the launch, and ensuing popularity, of web3 app The app, hosted on the Base sub-network and not Ethereum’s major layer, swiftly drew in a six-digit userbase and generated over $25 million in fees. In the past, a vogue of this extent might have driven fees to spike. Conversely, Ethereum’s daily gas fees have averaged lower by 26% since the advent of, as per data from FalconX Research.

Ethereum’s shining moment comes in the context of past missteps. For instance, the release of Otherdeeds, non-fungible tokens implying digital real estate, by Yuga Labs in April 2022 led to a spike in gas fees. Similarly, the launch of CryptoKitties, a digital cat breeding project, witnessed gas fees breaching above 900 gwei.

This grace period in Ethereum’s gas fees might, unfortunately, be temporary. While the majority of’s traffic has dissipated, data from IntoTheBlock indicates that combined transactions on Ethereum and optimistic roll-ups have neared all-time highs over the past months. However, the major growth occurred on the layer-2s, allowing Ethereum’s transaction levels to maintain balance.

This balance might endure with Ethereum’s upcoming upgrade, “proto-danksharding” (EIP-4844). It will make it cost-efficient for layer-2 networks to save data on the prime blockchain. It’s an enhancement that will materially amplify L2 throughput and diminish the expenses of transacting on rollups.

However, Ethereum might not be out of the woods yet. Amberdata’s research director Christopher Martin notes Bitcoin transactions have surged due to Bitcoin Ordinals’ launch, which might have allured some volume away from Ethereum, further easing the pressure. The future for Ethereum, nonetheless, seems both exciting and precarious. Whether the layer-2 gambit will pay off to resolve Ethereum’s scalability woes is a question that needs more time to unravel.

Source: Coindesk

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