{"id":16606,"date":"2024-09-02T13:40:41","date_gmt":"2024-09-02T10:40:41","guid":{"rendered":"https:\/\/forklog.com\/en\/ethereum-community-proposes-solution-to-inflation-issue\/"},"modified":"2024-09-02T13:40:41","modified_gmt":"2024-09-02T10:40:41","slug":"ethereum-community-proposes-solution-to-inflation-issue","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/ethereum-community-proposes-solution-to-inflation-issue\/","title":{"rendered":"Ethereum Community Proposes Solution to Inflation Issue"},"content":{"rendered":"<p>A Web3 researcher known as Cygaar has called for an increase in transaction fees for <span data-descr=\"large binary data arrays\" class=\"old_tooltip\">BLOB<\/span> objects in Ethereum to restore the ETH burn rate.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Right now the relationship between Ethereum L1 and its L2s is quite lopsided.<\/p>\n<p>L2s receive the benefits of Ethereum security without contributing much value back to ETH. There are two paths I see that can lead to equilibrium being restored:<\/p>\n<p>1) Increase the minimum blob fees\u2026 <a href=\"https:\/\/t.co\/EcFaDD8zJY\">pic.twitter.com\/EcFaDD8zJY<\/a><\/p>\n<p>\u2014 Cygaar (@0xCygaar) <a href=\"https:\/\/twitter.com\/0xCygaar\/status\/1829927994984701999?ref_src=twsrc%5Etfw\">August 31, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The implementation of EIP-4844 during the <a href=\"https:\/\/u1f987.com\/en\/news\/ethereum-developers-activate-dencun-hard-fork-on-mainnet\">March hard fork<\/a> Dencun significantly reduced fees for L2 solutions, particularly those using Rollups technology. Networks gained the ability to use binary data arrays when accessing the base data availability layer.<\/p>\n<p>Prior to the update, rollups were the largest consumers of gas in Ethereum, which increased ETH burning and deflationary pressure, noted Cygaar. After the hard fork, L2 networks began actively using BLOB objects, which were \u201cpractically free\u201d for them, and the cryptocurrency became inflationary again, the expert emphasized.<\/p>\n<p>Back in May, analysts at CryptoQuant <a href=\"https:\/\/u1f987.com\/en\/news\/ethereum-faces-inflationary-pressure-post-dencun-update\">noted<\/a> that since early April, the market supply of ETH began to grow. Researchers from Galaxy Digital in their report \u201c150 Days After Dencun\u201d stated that Ethereum&#8217;s average revenue <a href=\"https:\/\/u1f987.com\/en\/news\/dencun-update-spurs-rise-in-failed-transactions-on-ethereums-l2-networks\">fell by 69%<\/a> compared to the same period before the upgrade.<\/p>\n<p>According to Cygaar, L2 solutions benefit from the security of the base network \u201cwithout contributing much to ETH.\u201d He described these relationships as \u201cone-sided.\u201d<\/p>\n<p>The expert believes that in the short term, increasing the minimum fee for BLOB transactions could be a solution.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cL2s should pay a certain amount for using Ethereum&#8217;s data availability layer. People might argue that increasing costs will lead L2s to alternative solutions, but I would say that protocols that truly want to inherit Ethereum&#8217;s security will still incur these costs,\u201d Cygaar asserted.<\/p>\n<\/blockquote>\n<p>The second path he mentioned was the increased use of L2 solutions, which would result in more \u201cadequate\u201d pricing for BLOB operations. However, this is only possible in the long term.<\/p>\n<h2 class=\"wp-block-heading\">Opinions Divided Among Users<\/h2>\n<p>Ethereum community member Ryan Berckmans disagreed with the need to raise the minimum fee for transactions with arrays.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Good overview\u2026 I don&#8217;t think there&#8217;s a decision to make here \u2014 we&#8217;re simply going through the initial launch phase of blobspace and L2 maturation.<\/p>\n<p>Increasing the minimum blob fees (eg via an EIP hastily included in Pectra)<br \/>would imo be a knee-jerk reaction based on a mere 5\u2026<\/p>\n<p>\u2014 Ryan Berckmans ryanb.eth (@ryanberckmans) <a href=\"https:\/\/twitter.com\/ryanberckmans\/status\/1829944362114945392?ref_src=twsrc%5Etfw\">August 31, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cIn my opinion, this would be a knee-jerk reaction based on just five months of data,\u201d he stated.<\/p>\n<\/blockquote>\n<p>Berckmans noted that the growth statistics of the L2 ecosystem are \u201cexcellent and will inevitably lead to saturation with BLOB objects,\u201d increasing Ethereum&#8217;s revenue from operations with them.<\/p>\n<p>Doug Colkitt, founder of the DeFi protocol Ambient Finance, doubted that a surge in demand for data array space would lead to higher fees. He referred to the dominance of low-value transactions in L2 networks, which he called spam.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Many are holding out hope that the post-4844 shift of Ethereum from deflationary to inflationary will reverse if blobspace demand just increases a little more to become saturated.<\/p>\n<p>Unfortunately, saturation is unlikely to lead to any meaningful increase in Ethereum burn. Spend 5\u2026 <a href=\"https:\/\/t.co\/1QqJtbe1RZ\">https:\/\/t.co\/1QqJtbe1RZ<\/a> <a href=\"https:\/\/t.co\/um2lIe5njU\">pic.twitter.com\/um2lIe5njU<\/a><\/p>\n<p>\u2014 Doug Colkitt (@0xdoug) <a href=\"https:\/\/twitter.com\/0xdoug\/status\/1829611122221097281?ref_src=twsrc%5Etfw\">August 30, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Increasing the number of large transactions could be a solution, but this seems unlikely in the foreseeable future, added Colkitt.\u00a0<\/p>\n<p>Investor Hunter Orrell <a href=\"https:\/\/x.com\/hunterorrell\/status\/1829936435639828525\">supported<\/a> Cygaar&#8217;s idea. In his view, Ethereum as the first layer \u201cseems to bear all the costs\u201d in the current situation.<\/p>\n<p>A user under the pseudonym asym also advocated for introducing a base fee for BLOB transactions in L2 networks, considering the computing resources consumed.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">I think setting a floor fee makes sense given that computing resources are required for nodes to process blobs. It should be low enough that L2s can still achieve sub cent transaction fees.<\/p>\n<p>As it stands today, if blob space fills up and L2 transaction fees get expensive again,\u2026<\/p>\n<p>\u2014 asym ?\ufe0f (@0xAsym) <a href=\"https:\/\/twitter.com\/0xAsym\/status\/1829973093382832444?ref_src=twsrc%5Etfw\">August 31, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Analyst technoir <a href=\"https:\/\/x.com\/0xtechnoir\/status\/1829936744243818666\">noted<\/a> that dynamically adjusting fees for blockchain processing of array operations seems like \u201ca good interim step\u201d while waiting for increased demand for block space.<\/p>\n<p>Ethereum developers have <a href=\"https:\/\/u1f987.com\/en\/news\/ethereums-pectra-update-scheduled-for-early-2025\">scheduled<\/a> the next network update after Dencun, called <a href=\"https:\/\/u1f987.com\/en\/news\/ethereums-pectra-update-to-enable-recovery-of-private-keys\">Pectra<\/a>, for the first quarter of 2025.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Web3 researcher known as Cygaar has called for an increase in transaction fees for BLOB objects in Ethereum to restore the ETH burn rate. Right now the relationship between Ethereum L1 and its L2s is quite lopsided. L2s receive the benefits of Ethereum security without contributing much value back to ETH. There are two [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":16605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1178,46,1150,1138],"class_list":["post-16606","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-blockchain-fees","tag-ethereum","tag-news-plus","tag-opinions"],"aioseo_notices":[],"amp_enabled":true,"views":"26","promo_type":"","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/16606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=16606"}],"version-history":[{"count":0,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/16606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/16605"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=16606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=16606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=16606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}