L2 transaction fees need to be under 5c to be ‘truly acceptable’

Ethereum (ETH) co-founder Vitalik Buterin believes that layer 2 transaction fees need to be below $0.05 to be “really acceptable”.

Buterin made the latest comments in response to a Twitter post by Bankless podcast host Ryan Sean Adams, who shared a screenshot of average transaction fees for eight Ethereum Layer-2 platforms.

The data comes from L2fees.info, a website that compares the cost of Ether’s layer 1 network compared to layers 2 built on top of it.

The only layer 2 that meets Buterin’s desired transaction fee below $0.05 is Metis Network at $0.02, however a token swap on the platform still costs $0.14. Fees go up considerably from there, to $0.12 per transaction on Loopring and up to $1.98 per transaction on Aztec Network.

Ethereum Layer 1 is relatively affordable right now at $3.26 per transaction and a whopping $16.31 per token swap, however that only lasts until Yuga Lab launches another NFT collection where fees may skyrocket to $14,000 per mint.

Adams emphasized the importance of Layer-2 in keeping Ethereum affordable, noting that “this is Ethereum and it’s not expensive,” but Buterin suggested that it wasn’t there yet:

“You need to get less than $0.05 to be really acceptable in my opinion. But we’re definitely making great progress, and even proto-dunksharding may be enough to get us there for a while!

Buterin’s affordable transaction goal is a long-standing one that first stated during an interview in 2017 that “the Internet of money should cost no more than 5 cents per transaction.”

In January, Buterin said that he still I stand for this goal “100%” as part of a long Twitter thread going back over some of the key things he’s said or written in the last 10 years.

“That was the goal in 2017, and it’s still the goal now. This is precisely why we spend so much time working on scalability,” said Buterin.

Related: ETH Gas Price Rises as Yuga Labs Cashes in $300M Selling Otherside’s NFTs

Short-term gas rate reduction

Proto-danksharding or EIP-4844 which Buterin referred to as downward pressure on fees in his response to Adams, is a recently proposed upgrade to Ethereum that will see key elements of danksharding, a new and simplified design of previous fragmentation, implemented. on the network without any fragmentation update being initiated.

Proto-danksharding will enable a new type of transaction called a “blob carrier transaction” that carries an additional 125 KB of data (blob) that cannot be accessed by the Ethereum virtual machine (EVM). The general idea is that this will help scale the network significantly in the short term while reducing congestion and competition for gas usage, thereby lowering gas rates.

“Because validators and clients still have to download the full blob content, data bandwidth in proto-danksharding is targeted at 1MB per slot instead of the full 16MB. However, there are large scalability gains because this data does not compete with gas usage from existing Ethereum transactions,” Buterin wrote in a blog post last month.

While the Ethereum roadmap is notoriously flexible, the shard chain update is scheduled for sometime in 2023, well after the Mainnet merger with Beacon Chain.

Shard chains provide ways to store data horizontally and cheaply across the network, which in turn spreads the load, reduces congestion, and increases transaction speeds. Both Ethereum and its Layer-2s are expected to benefit from this dramatically.