Where Will the Next Billion Crypto Users Pay for Gas?

Since the DeFi Summer demonstrated the vast potential of permissionless blockchain-based code, users and developers have been exploring new applications for this revolutionary technology.
Initially, certain use cases seemed impractical for blockchain implementation due to high computational costs and slow transaction speeds. During the last cycle, we have all experienced tremendously expensive gas fees on Ethereum for even simple swaps or transfers.
Back then, everyone was searching for the “Ethereum killer” among alternative Layer 1 solutions seeking a faster, cheaper and more scalable platform.

With the internet transitioning towards decentralization, we anticipate the onboarding of billions of new users.
This shift raises the question: Which platform will users and developers adopt. What approaches will satisfy this increasing demand and which of them are sustainable in the longrun.

In this article, provided by our dedicated researcher, Adam Novocký, we’ll explore the survivors of the Layer 1 race and introduce new contenders aiming to meet the growing needs of crypto users.
We’ll delve into Ethereum’s significant upgrades, particularly its shift toward becoming a settlement layer supported by various Layer 2 solutions.
Let’s begin by examining how Ethereum is evolving to accommodate future growth. 

Upgrading Ethereum

Ethereum has undergone a few significant upgrades since the last cycle, most notably the introduction of proto-danksharding via EIP-4844.
This upgrade allows Layer 2 solutions (L2s) to post binary large objects—“blobs”, which are essentially compressed transactions—more efficiently, thereby reducing gas fees and storage costs. 

This is a significant step towards Ethereum becoming the settlement layer for various L2s. Now, let’s take a look at the Layer 2 solutions that are an integral part of this transition.

Rollups

Many have tried to speed up, or optimize the computation done on Ethereum. This involves performing some computation off-chain and writing the proof back to Ethereum.
This approach increases speeds and lowers prices while retaining the economic security of Ethereum. Let’s take a look at these approaches.

Optimistic

Starting with Optimism, which utilizes its EVM-equivalent environment to perform most of the computation off-chain. It optimistically assumes the validity of the computation and posts it to the Ethereum mainnet, with a 14-day window for someone to dispute this validity.
Optimism also introduced its OP Stack, which serves as the foundation for other rollups like Base (which on its own has more activity than OP and ARB combined, usually taking the 3.-4. spot in activity metrics), and depending on how much they comply with its specifications, they can be part of the Superchain.

Similarly, the leader among optimistic rollups is Arbitrum. Although the main architecture may seem similar at first glance—same off-chain computation, same fraud-proof mechanism, and optimistic validity assumption—there are some differences.
Both Optimism and Arbitrum aim for EVM compatibility, meaning that contracts can be deployed without modification. Optimism even reached EVM equivalence, thus the differences are as minimal as they can be.

Arbitrum has also introduced Stylus, a new virtual machine that allows developers to write code in WebAssembly languages such as Rust, C, or C++.
Nevertheless, optimistic rollups are popular for their speed, affordable execution prices, and relative simplicity. 
Arbitrum leads with around 500,000 daily active addresses and 1.5–2 million daily transactions, while Optimism has approximately 80,000 daily addresses and 700,000 daily transactions.