The upcoming Cancun upgrade has sparked widespread excitement across the Ethereum ecosystem, particularly around one bold prediction: that Ethereum Layer 2 (L2) gas fees could drop by 90% or more. While this sounds promising—and technically plausible—the reality may be far more nuanced than the hype suggests.
Let’s break down what the Cancun upgrade actually brings, how it impacts L2 cost structures, and why the expected fee reduction might fall short of market expectations.
Understanding the Core of Cancun: EIP-4844 and Blob Transactions
At the heart of the Cancun-Deneb upgrade lies EIP-4844, also known as Proto-Danksharding. This proposal introduces a new type of transaction called a blob-carrying transaction, which allows Layer 2 rollups to post large chunks of data to Ethereum’s mainnet at a fraction of the current calldata cost.
These blobs are temporary data containers—each capable of holding up to ~1.77MB—that are attached to blocks but eventually pruned from nodes after a set period. Crucially, they come with their own independent gas market, meaning blob fees are determined separately from traditional Ethereum gas pricing.
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With three new blob slots per block, the total data throughput available for L2s increases dramatically. On paper, this represents a massive expansion in data availability capacity—potentially 30x more space than what’s currently allocated for rollup data within regular blocks.
The Simple Math vs. Real-World Complexity
A common argument circulating in crypto circles goes like this:
"If supply increases 30x and demand stays flat, prices should drop to ~1/30th."
This logic follows basic economic principles:
Price ≈ Demand / Supply
Currently:
- Ethereum processes about 107.9 billion gas per day
- Rollups consume roughly 10% of that in gas costs, mostly due to data availability (DA) posting
- Post-Cancun, L2s gain access to three full blob-sized spaces per block, vastly increasing supply
So yes—if everything else were constant—fees could plummet.
But here's the catch: everything else won’t stay constant.
Layer 2 networks aren’t passive recipients of cheaper data space. They’re competitive entities engaged in strategic behavior, racing for users, developers, and market dominance. And when new resources become available, competition intensifies rather than dissipates.
The Hidden Cost Structure of L2 Fees
It's important to understand that L2 gas fees are not monolithic. They consist of two primary components:
- Data Availability (DA) Publishing Cost (~90% of current fees)
This is the fee paid to Ethereum to store transaction data temporarily so validators can verify state correctness. - Validation & Batching Overhead (~10%)
Includes costs related to batching transactions, fraud proofs or zk-proof verification, sequencer operations, and network coordination.
Post-EIP-4844, only the first component—the DA publishing cost—will see direct relief thanks to cheaper blob space. But as we’ll see, even this benefit may be offset by rising operational intensity among top L2s.
Competitive Dynamics: Why “Free” Space Isn’t Free
Economist Ronald Coase taught us that in shared resource environments (commons), actors often overuse resources not out of waste, but as a strategic move to exclude rivals.
In the context of blob space:
Blob slots aren’t just storage—they’re weapons in a competitive arms race.
Leading L2 projects like Arbitrum, Optimism, and others have strong incentives to:
- Increase their batch frequency
- Submit data to Ethereum more frequently
- Occupy more blob space per unit time
Why? Because faster batch submission means:
- Faster finality on L1
- Improved user experience
- Stronger trust assumptions
- And crucially—less room for competitors to scale efficiently
Imagine if major L2s adjust their sequencers to submit batches every 12 seconds, matching Ethereum’s block time. That’s a 5x increase over current practices (where batches are posted every few minutes). While this improves UX, it also multiplies the number of transactions needed—and thus drives up both validation load and total fee expenditure.
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As a result, even though each individual blob is cheaper, the total volume of blobs used per day could skyrocket, neutralizing much of the cost savings.
Diminishing Returns: The Marginal Impact of Blob Supply
There comes a point where adding more supply no longer reduces price meaningfully—especially when demand adapts dynamically.
We can expect a diminishing return curve for gas fee reductions post-Cancun:
| Stage | Effect |
|---|---|
| Initial Phase | Sharp drop in DA costs; early users enjoy ultra-low fees |
| Mid Phase | Top L2s ramp up batch frequency; blob usage spikes |
| Late Phase | Network congestion shifts from computation to data submission; fee savings plateau |
Eventually, the system reaches an equilibrium where cost savings are capped, not because technology failed—but because competition consumed the surplus.
This mirrors real-world infrastructure expansions: building more roads often leads to more traffic, not less congestion.
Profitability Trends Signal a Zero-Sum Game
Looking at historical profitability across top L2s over the past year reveals something telling:
No sustained growth in profits. Instead, strong seasonality and volatility.
This suggests:
- The L2 market is nearing saturation
- User acquisition costs are rising
- Revenue gains by one chain often come at another’s expense
In such a zero-sum environment, any efficiency gain—like cheaper blobs—is likely to be reinvested into competitive maneuvers rather than passed directly to users via lower fees.
So, Will Gas Fees Drop 90%?
Realistically? No—not across the board.
While some optimistic scenarios may show short-term dips of 90%+ during low-demand periods, the long-term average reduction is likely between 50–70%, assuming aggressive competition among L2s.
Moreover:
- Fees will remain volatile depending on blob usage patterns
- UX improvements may take priority over cost-cutting
- Network operators will optimize for speed and security over minimal spend
That said, this is still a transformative upgrade. A 60% reduction in base costs opens doors for microtransactions, social apps, gaming, and other high-throughput use cases previously unviable on-chain.
Frequently Asked Questions (FAQ)
Q: What is EIP-4844?
A: EIP-4844 introduces blob-carrying transactions to Ethereum, enabling cheaper data posting for Layer 2 rollups. It's the foundation of proto-danksharding and a key part of the Cancun upgrade.
Q: How much cheaper will L2 transactions get after Cancun?
A: Most estimates suggest a 50–70% reduction in average fees, though short-term drops up to 90% may occur during low congestion. Long-term savings depend on how L2s use newly available blob space.
Q: Why won’t fees drop by 90% as widely claimed?
A: Because leading L2s are likely to increase batch frequency and consume more blob space, offsetting gains from lower per-blob costs. Competition limits how much savings get passed to end users.
Q: Do all L2s benefit equally from EIP-4844?
A: No. ZK-Rollups and optimistic rollups that rely heavily on on-chain data posting benefit most. Networks with alternative DA layers (e.g., using Celestia or EigenDA) gain less direct value.
Q: When is the Cancun upgrade happening?
A: Expected in early 2025, pending final testing and network readiness.
Q: Can I already use blob-based transactions?
A: Not yet on mainnet. Developers can experiment on testnets like Sepolia and Holesky ahead of the full rollout.
👉 Stay ahead of the curve—explore tools that track real-time L2 fee trends and performance metrics.
While the dream of $0.01 transactions may need recalibration, the Cancun upgrade remains a pivotal step toward scalable, accessible Ethereum. The true winner isn’t any single chain—it’s the entire ecosystem, moving closer to mass adoption.