Flashbots Research: Will increasing the Blobspace floor price affect the existing transaction costs in the Ethereum ecosystem?

Original Title: 《Understanding Minimum Blob Base Fees》

Author: Data Always - Flashbots Research

Compiled by: 夫如何, Odaily 星球日报

Flashbots Research researcher Data Always published an article arguing whether increasing the minimum base fee for blobs affects the costs of existing L2 or related transactions. The summary of the article is as follows:

• The setting of the blobspace base price has sparked community controversy, partly due to misunderstandings about how blobs find their path on-chain. Although it is currently believed that blobs contribute zero to the protocol, this view only holds when the analysis is limited to blobspace fee considerations.
• Transactions carrying blobs still need to pay mainnet gas fees, and during periods of high demand, the impact of gas priority auctions complicates the pricing of L2 transactions.
• This article argues whether increasing the minimum base fee for blobs can alleviate the misalignment between price and demand.
• Overall, the impact of this adjustment on transaction costs is limited, especially for efficient blob submitters, where the fee increase is negligible.

The following is the original text, compiled by Odaily 星球日报.

The proposal to set the blobspace base price is controversial within the community, but this may stem from misunderstandings about how blobs find their path on-chain. It is widely believed that blobs currently contribute zero to the protocol, but this only holds true when we limit our analysis to blobspace fees.

Although the blobspace fee market has made slow progress in reaching target demand levels, encountering the cold start problem predicted by Davide Crapis a year before Deneb, transactions carrying blobs still pay mainnet gas fees, whether for execution or execution priority. The current concern raised by Max Resnick is that the hard limit of six blobs per block, combined with the slow response of the blobspace fee market, may lead to prolonged priority gas auctions during periods of high network demand. During these PGA periods, the pricing of L2 transactions becomes more difficult, while strict blob mempool rules also make blob inclusion unpredictable.

EIP-7762 aims to minimize the misalignment between future blobspace prices and blob demand until L2 adoption helps us overcome the cold start problem. The current configuration sets the minimum blobspace base fee at 1 wei, requiring at least 30 minutes of fully saturated blocks for blobspace fees to reach $0.01 per blob and start affecting blob pricing dynamics. Under the current system, when demand surges, the network reverts to unpredictable PGAs as L2 competes for timely inclusion.

For example, on June 20, the network experienced a second blob reversal event, stemming from the LayerZero airdrop. During this period, the excess demand for blobs lasted for six hours until the network reached equilibrium.

Current Status of Blob Transaction Fees

Six months after the launch of Deneb, the utilization of blobspace remains below target. Therefore, the blobspace base fee remains very low, and most blob-generated blobspace gas fees can be ignored. So far, only three weeks have seen the average cost of blobspace rise above $0.01 per blob, during the "blobscription" frenzy on March 25 and April 1, and during the LayerZero airdrop on June 17.

Compared to the fees in blobspace, transactions carrying blobs (also known as Type-3) still need to pay gas fees to execute on the mainnet. Although gas prices have dropped to their lowest levels in years, the average execution cost per blob ranges from $0.50 to $3.00. Compared to the historically released call data prices of L2, these costs are negligible, and blobs are essentially fully subsidized by the network, but this small fee remains significant when setting the minimum base fee for blobs.

If we further break down the execution costs of transactions carrying blobs based on their blob content, we find that the market is highly heterogeneous. Transactions carrying a single blob pay the highest fees, while transactions carrying five or six blobs pay little or no fees per blob. In fact, the total fees paid by these five or six transactions are much lower.

The differences in blob submission strategies among different entities are one of the significant reasons for this situation. Base, OP Mainnet, and Blast, along with many smaller L2s, are financially efficient by publishing data to EOAs, requiring only 21,000 mainnet gas regardless of the number of blobs, but these transactions are not suitable for fraud proofs. These chains account for the vast majority of transactions carrying five or more blobs, reducing the perceived price of submitting multiple blobs in a single transaction. In contrast, L2s publish more complex data to better support fraud proofs, such as Arbitrum, StarkNet, Scroll, ZkSync Era, Taiko, and Linea, using significantly more mainnet gas, typically submitting only one blob per transaction.

Based on the statistics above, if we combine the blobspace and execution fees of each transaction, we find that, aside from the brief surge in blob demand (which will not be affected by increasing the minimum base fee), the fees paid in the current blobspace distribution are almost entirely concentrated in execution fees. This indicates that the blobspace fee market is currently not functioning properly, and there is significant room to increase the minimum gas fee for blobs without significantly raising the total costs paid for blobs.

In contrast, if we focus on the period when the blobspace fee market enters price discovery, the fee density quickly shifts toward blobspace fees. When the market operates, it seems to work well. Therefore, the most important issue is the recurring cold start problem—the dilemma currently facing the market.

When the blobspace fee market is in an execution fee-dominated environment, blob submitters that publish less execution data (mainly OP Stack chains) benefit. It also complicates the block building process: historically, many algorithms determined blob inclusion through priority fees per gas, but due to the significant differences in mainnet gas usage for these transactions, it forces L2s that submit higher quality proofs to pay higher rates for the majority. Larger transactions further amplify the advantage of submitting less execution data. By approaching a blobspace fee-dominated environment, we weaken this advantage.

Impact of Minimum Fees

At the current price of ETH, Max's original proposal sets the minimum fee for each blob at $0.05. By supplementing execution costs with this new minimum fee, the proposal will increase the average cost per blob by 2%.

The revised proposal lowers the minimum blob base fee to 2^25, about one-fifth of the original proposal value, or $0.01 per blob. Starting from early July, this means the average cost of blobs will increase by 0.7%, but due to differences in financial efficiency among blob submitters, the percentage change is not uniform across different entities.

Modifying the earlier transaction fee analysis to consider the minimum blobspace base fee of 2^25 wei, only considering transactions where the original blobspace base fee was below the newly proposed minimum fee, we see that while the fee structure begins to change significantly, the blob base fee remains a minor component for all affected blob-carrying transactions. Efficient transactions submitted by Base and OP Mainnet (carrying five blobs) will see a fee increase of 10% to 30% based on L1 gas prices, a change that should be easily absorbed. In contrast, less efficient transactions, particularly those carrying one to three blobs, will see fee increases of less than 10%.

Table: Blob submission statistics by entity from July 1, 2024, to September 17, 2024, assuming an ETH price of $2,500.

Modifying the earlier transaction breakdown to consider the minimum blobspace base fee of 2^25 wei and only considering transactions where the original blobspace base fee was below the proposed new minimum fee, we see that while the fee structure begins to change significantly, the blob base fee remains a small part of all affected blob-carrying transactions. Efficient transactions submitted by Base and OP Mainnet (carrying five blobs) will see a fee increase of 10% to 30% based on L1 gas prices, a change that should be easily absorbed. In contrast, less efficient transactions, particularly those carrying one to three blobs, will see fee increases of less than 10%.

So far, the minimum blob base fee of 2^25 has not accounted for the majority of the costs paid in blob-carrying transactions.

Blobspace Response Time

Under EIP-4844, the maximum block interval update for blobspace base fees is set at 12.5%. Starting from a price of 1 wei, it requires 148 maximum capacity blocks, exceeding 29 minutes (12 seconds per block), for the base fee to rise above 2^25 wei. This update cycle has been defined as the protocol's response time, but it still only represents the shortest amount of time. Due to market inefficiencies, blocks are not fully loaded with blobs, significantly extending the time for price discovery.

Before the LayerZero airdrop on June 20, the blob base fee was at its minimum of 1 wei. At peak times, the blob base fee reached 7471 gwei (approximately $3,450 per blob). Although it could theoretically reach this height in 51 minutes, the actual process took nearly six hours. Under Max's proposal, this peak could theoretically be reached in 21 minutes, but clearly, these theoretical values are not accurate.

The goal of the proposal is to set the minimum blob base fee close to the turning point where blobspace fees begin to occupy a measurable share of total costs, rather than merely focusing on time. On June 20, although the number of blobs began to surge after 11:00 UTC, it wasn't until 15:17 UTC that blobspace fees began to account for 0.1% of the total costs paid for blobs, and it wasn't until 15:41 UTC that it exceeded the base fee of 2^25 wei (0.0335 gwei).

In contrast, if the minimum base fee during the LayerZero airdrop had been set at 2^25 wei, the network might have bypassed the cold start problem and minimized the misalignment between price and demand. As shown in the figure below, we can predict that the blob market will still need an hour or more to normalize.

In summary, increasing the minimum blobspace base fee is not a panacea, but it should be seen as a welcome change for the protocol. The market impact of this proposal should be minimal, with only the cheapest and lowest quality blob prices exceeding a 1% increase, while still remaining significantly lower than the prices of its competitors.