The upcoming Cancun upgrade has sparked widespread anticipation across the Ethereum ecosystem, particularly around one bold claim: after the upgrade, Layer 2 (L2) gas fees on Ethereum could drop by 10 times or more. While this promise sounds transformative—potentially unlocking mass adoption through drastically lower transaction costs—the reality may be more nuanced than the hype suggests.
Let’s take a closer look at what the Cancun upgrade introduces, how it affects gas pricing dynamics, and why real-world economic behaviors might limit the expected savings.
Understanding the Core of Cancun: EIP-4844 and Blob Transactions
At the heart of the Cancun upgrade is EIP-4844, also known as Proto-Danksharding. This proposal introduces a new type of transaction called a blob-carrying transaction, which allows Ethereum to store large chunks of data off the main execution layer while still ensuring data availability and security.
Each blob can carry up to ~1.77 MB of data—roughly equivalent to an entire Ethereum block—and comes with its own separate fee market. Three blobs will be available per block initially, effectively increasing the data throughput available for rollups.
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This means L2 rollups no longer need to cram all their transaction data into regular Ethereum blocks, which were historically expensive due to congestion. Instead, they can now post their data more efficiently via blobs, theoretically reducing their largest cost component: data availability fees.
Currently, data availability costs account for about 90% of total L2 gas expenses, so even a modest reduction here could significantly lower user fees.
The Oversimplified Math: Why Some Predict a 30x Drop in Gas Fees
A common argument circulating in technical circles goes like this:
- Today, L2s consume roughly 10% of Ethereum’s daily gas usage (~107.9 billion units).
- With only limited block space, competition drives up prices.
- After EIP-4844, three full blob blocks worth of dedicated space become available per slot.
- If we assume this increases supply by ~30x relative to current L2 data demands...
- And if demand stays constant...
- Then gas prices should fall to 1/30th of current levels, far exceeding the "10x cheaper" narrative.
But here's the catch: this model assumes perfect linearity and ignores real-world game theory.
In economics, price isn’t just supply divided by demand—it’s shaped by behavior, incentives, and strategic competition.
And in Ethereum’s highly competitive L2 landscape, those factors are about to play a major role.
The Hidden Force: Competitive Dynamics Among Rollups
Ethereum’s L2 ecosystem isn’t a cooperative utopia. It’s a fiercely competitive, zero-sum market where projects fight for developers, users, liquidity, and mindshare. The addition of blob space doesn’t eliminate that competition—it simply shifts the battlefield.
According to Coase’s theory of common resources, when new shared resources are introduced without coordination or pricing mechanisms, dominant players often overuse them to gain strategic advantages.
In this case, leading rollups may flood the blob space intentionally, not because they need it all, but because:
- They want faster finality and better user experience.
- They aim to crowd out smaller competitors by consuming disproportionate bandwidth.
- They seek to strengthen their network effects through increased activity volume.
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One likely tactic? Adjusting their sequencer batch frequency from every few minutes down to every 12 seconds—matching Ethereum’s block time.
Why does this matter?
Frequent batching improves perceived speed and responsiveness on the L2, giving users faster confirmations. But it also means more transactions are submitted to Layer 1, consuming more blob space—even if each batch is underfilled.
This behavior inflates two previously minor cost components:
- Verification overhead
- Batch submission frequency costs
As these costs rise, the savings from cheaper data storage start to erode.
Diminishing Returns: When More Space Doesn’t Mean Cheaper Fees
The result? The cost-reducing effect of added blob space diminishes rapidly as usage increases.
Initially, when blob utilization is low, gas fees on L2s could indeed drop sharply—perhaps even approaching that elusive 10x improvement for some networks.
But as dominant rollups ramp up their batch frequency and occupy more space:
- Blob demand rises.
- The independent blob fee market begins to clear at higher prices.
- Marginal gains from extra capacity fade.
Eventually, the system reaches a new equilibrium where:
- Data is cheaper than before—but not 30x cheaper.
- Competition continues to drive inefficient resource use.
- Smaller L2s struggle to compete for affordable data slots.
So while users will see lower fees post-Cancun, expecting a universal 10x drop may set unrealistic expectations.
Real-World Evidence: Profitability Trends Among Major Rollups
Looking at annual profitability data across five major rollups reveals another insight: despite growing adoption, profit margins remain flat with seasonal fluctuations.
There’s no clear upward trend in earnings—indicating that most revenue gains are being reinvested into infrastructure, incentives, or lost to rising operational costs.
This suggests that rollups aren’t operating with wide profit margins they can easily pass on to users via lower fees. Instead, they’re locked in a continuous cycle of reinvestment to maintain competitiveness.
In such an environment, cost savings from EIP-4844 are more likely to be used for:
- Scaling throughput
- Improving UX
- Funding token incentives
Rather than being fully passed on as cheaper transactions.
FAQs: Addressing Key Questions About Post-Cancun Gas Fees
Q: What exactly is EIP-4844?
EIP-4844 introduces blob-carrying transactions to Ethereum, enabling L2 rollups to offload large amounts of data at a lower cost. These blobs have limited validity (deleted after ~18 days) and are not accessible to smart contracts, making them ideal for temporary data storage.
Q: Will all L2s benefit equally from the Cancun upgrade?
No. Only blob-compatible rollups (like Optimism, Arbitrum, zkSync, etc.) will benefit directly. Older or non-EVM-compatible chains without integration plans won’t see immediate improvements.
Q: How soon after the upgrade will I see lower fees?
Most users should notice fee reductions within weeks of activation, assuming smooth deployment. However, actual savings depend on individual L2 usage patterns and how quickly teams adopt optimized batching strategies.
Q: Could gas fees ever go up after Cancun?
Yes—temporarily. If dominant L2s flood the network with frequent batches, short-term congestion in the blob market could push blob fees higher than expected, offsetting some savings.
Q: Is full sharding still necessary if EIP-4844 helps scalability?
Absolutely. EIP-4844 is just Phase 1 (Proto-Danksharding). True sharding will eventually expand blob capacity from 3 per block to potentially 64+, enabling long-term scalability and sustained low fees.
Final Outlook: Modest Gains Amid Fierce Competition
So, will Ethereum L2 gas fees really drop by over 10x after the Cancun upgrade?
Partially—but not universally or permanently.
Yes, the structural improvements from EIP-4844 lay critical groundwork for cheaper transactions. For many users, especially those on efficient rollups during off-peak times, double-digit fee reductions are possible.
However, economic incentives and competitive strategies among L2s will limit how much those savings last. As leading projects optimize for speed and market dominance—not just cost efficiency—the benefits of expanded capacity will be partially absorbed by increased consumption.
Ultimately, Cancun isn't a magic bullet—it's a powerful step forward in Ethereum's scaling journey. But real-world outcomes depend not just on code, but on human behavior.
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