Progress of Ethereum Scaling – Are L2s Delivering? - Lorenz Lehmann

Transcript

I will J just a second until everyone can uh move out please if you still want to discuss from last panel talk. Thank you. Okay. Yeah. Welcome everyone. My name is Lawrence. I'm the research lead at grow the pie and I'm here to talk a little bit about the progress of the Ethereum scaling and especially the rollup ccentric roadmap and to really answer the question whether layer 2 are actually delivering on their promise to scale Ethereum ecosystem and I really want to focus this talk on not really giving my opinion but really let the data talk

itself. So maybe uh a side of hands, who remembers these times when you um had to go on ether scan and check the gas price before you minted an NFT just to shed a tear before you actually pressed send and paid $50 for an NFT mint. Who remembers these times? Okay, perfect. Yeah, these were rough times and luckily um most of these times are over now with the layer 2s and how did we actually manage to overcome these problems and I think for that we have to take a step back and really start in late 2020 because that's where actually the Ethereum foundation made the decision to

not focus on execution charting which it originally defined in the white paper but really to focus on data sharding um because execution sharding is very difficult. Data sharding is much easier to ex to really yeah to develop and get out faster and in combination with data sharding they came up with the rollup ccentric road map because through these two things you can really scale Ethereum almost as good as execution sharding. So yeah, Ethereum Ethereum Foundation shifted its main research efforts late 2020 and also Vitalic launched a bunch of um blog posts about

it and that's where we really started with the rollup ccentric road map. But yeah, now it's not 2020 anymore. Now it's 2025. So if my father works in on me and asks me did we actually scale Ethereum, what do I answer? And now I want to present some data um to see if we actually scaled Ethereum. Ah yeah one more important point uh the Denkun upgrade in March 2024 introduced blobs and blobs is data sharding and what actually went live on Ethereum. It is um it was also called protodank sharding and had the EIP 4844 tag and

what it actually did is it introduced a blob carrying transaction. So blobs being just binary large objects you can now include basically a set of data into your transaction and post it on chain. Yeah. So that's very important to know and it was introduced in March 2024 with the Denkun upgrade. Yeah. So now let's jump into the actual data. What you can see here is the number of unique addresses interacting within the Ethereum ecosystem. And you can see each bar represents one week and the blue bars are Ethereum layer 1. So I cut

off the bar here at 2022, but if we extend it out even further to the left, we can really see how Ethereum layer 1 is already at max capacity. So it always averages around 2 million unique addresses each week and there's no there's no sign of scaling. and the yellow bars which you can see here and slightly increasing over the time. Um these are the layer 2s bunched up into one. So we can really see how the layer 2s started to scale the Ethereum ecosystem and especially around July where base by Coinbase the layer 2

launched we can really see it took up like it had an uptick. However, you can also see that around 2024, we were stagnant, right? We had about 2x the throughput or like not the throughput but the active user on layer 2 as on layer 1, but there was no significant growth. And now once the blobs were introduced with the denkun upgrade, we can really see how this actually caused an exponential rise. And just last week, I think this slides is maybe one week behind, but just last week, we had around 15 million active addresses in the Ethereum ecosystem, which I think is a huge number

considering we were stagnant at around 2 million for most of the last five or six years. Then another really important chart is the transaction costs, right? Um the problem I mentioned at the beginning, but layer 2 also started kind of rough, right? At the beginning, if you wanted to transact on optimism or arbitrum, you also had to pay around three to four dollars for trans for a transaction. And only once um EIP 4844 went live with the blobs and the data sharding, we really saw something that hasn't been seen on Ethereum before, which was subsend transaction fees and it was basically

this these charts are basically heading to zero as you can see and all of these different layer 2s they have minus 99% over the time frame you can see here. So yeah, data sharding really did the work and made transaction fees almost free. And yeah, this is my I guess one of my favorite charts. It's uh how much data is being posted to Ethereum. What you can see here in the blue part is the call data. That's how layer 2s actually post the data before data sharding onto the chain which is basically just adding data to your input field when you send a

transaction. It's not optimized for that meaning it's very expensive. So these layer 2 actually paid hundreds of thousands of dollars every day just to post their transaction data onto Ethereum and settle their state. And you can also really nicely see how yeah the call data increased over time as more and more layer 2 launched and had to use call data. And now once data sharding launched, we now have the blobs and blobs enabled to really have rollups post much more data on chain. And you can really see that here neatly how all the layer 2 switch to blobs, post their data, post their

transaction data onto Ethereum through blobs and we are now doing around 3.2 megabytes or gigabytes of data per day. And now to the most impressive chart I think which is the throughput. Um throughput is how many computations are being executed in the execution environment. So you probably know it uh if you send a transaction you always have a gas limit and what you can see here on the y-axis is a chart of mega gas per second and all of the layer 2s are stacked upon each other and we can really see that this is a

exponential growth chart right um especially base the blue section really scaled the layer 2 space significantly but also like ethereum layer one, right? You can still see Ethereum layer 1 here, which is just like this really thin blue line. So, you can really see how much more transaction we are now throughputting in the Ethereum ecosystem and how blobs really helped to increase the throughput in the Ethereum ecosystem. So, yeah, when my father now walks in on me and asks me, did we scale Ethereum? I can clearly say yes, we

actually scaled Ethereum over the last five years. And I think in our current discussions on Twitter and whatever, we always focus too short on the short term. We need to take a step back and really appreciate how far we came so far. Um, and as you can see, we are scaling Ethereum and it's still happening as we speak in an exponential way. And I see I still have around one minute, so I will quickly give you a hot take. um to wrap up the session and this hot take is all about um my idea how if the asset actually succeeds in the long term and I think the ultimate goal here is that if the

asset needs to be long-term greedy what do I mean by long-term greedy well with this data sharding taking effect last March um we can really see how the fees dropped significantly ly all of a sudden Ethereum is not deflationary anymore. There are not a lot of fees flowing back to Ethereum. And now if the asset can it capture enough value to yeah to sustain its evaluation and if you ask me I think it's a necessary step. Um especially if you look at the adoption currently with huge institutions like Robin Hood, Deutsche Bank and Black Rockck building their stable coin products on Ethereum.

Do you guys really think they would have built if they would have still paid $3 for each stable coin transaction? Not really. Right. So I think it's a necessary step in the short term to yeah to forget about the gains in the short term and really focus on adoption. And if we can succeed with adoption, it validates that we are giving up the short-term gains for a long-term growth strategy. It's kind of similar to AWS credits. I don't know if you guys are using AWS, but they always give you so many free credits in the first year.

Why? because they want you to build on AWS and once you're locked in then they charge you and I think Ethereum needs to have a similar strategy and that's what I call long-term greedy. Yeah. Okay. And that wraps up my talk. Thank you guys for listening and if you have any questions feel free. Thank you very much Loren. Definitely bringing the scaling conversation to everyone's everyone's mind. It's a conversation more people should be having. So, any questions from the audience? No. Okay. Thanks very much again, Lens. Thank you.