One of the reasons for the success of Ethereum’s second layer solutions (ETH) is their low transaction costs. Despite this, Vitalik Buterin, the network’s famous co-founder, believes that a transaction on these layer 2s should cost no more than 5 cents to be acceptable.
Vitalik Buterin talks about Ethereum’s layer 2
The Ethereum network (ETH) has taken centre stage in 2021 with the emergence of decentralised finance (DeFi) and non-fungible tokens (NFTs). However, this wave of new users has led to congestion on the blockchain and increased transaction fees.
As a result, so-called “layer 2” solutions have emerged. In short, these solutions allow the offloading of part of the transaction data to their network, inevitably leading to a decongestion of the main blockchain.
According to Ethereum co-founder Vitalik Buterin, the transaction costs of these layer 2 solutions should not exceed 5 cents to be “truly acceptable”.
Needs to get under $0.05 to be truly acceptable imo. But we’re definitely making great progress, and even proto-danksharding may be enough to get us there for a while!
– vitalik.eth (@VitalikButerin) May 3, 2022
This comment is in response to Ryan Sean Adams, the founder of the Bankless podcast. He was presenting different second layer solutions and their transaction fees, explaining that “this is Ethereum and it’s cheap”.
But then, what are the fees for layer 2?
According to information from on-chain data aggregator L2Fees.info, the only layer 2 solution that meets Vitalik Buterin’s requirements is Metis Network. Transaction fees are currently $0.02, although it still costs $0.14 to swap tokens.
At the bottom of the table is Arbitrum One, with fees close to $0.7, and Aztec Network, which tops out at $2.01 per transaction. Lately, the Ethereum network has been relatively affordable, at just $2.1 per transaction and $10.48 to trade tokens.
However, the successful launch of the Otherside NFT collection has led to a temporary explosion in transaction prices. While sales exceeded $560 million in the space of 24 hours, mint fees increased tenfold. Some users even had to pay more than $14,000 to get one of the new NFTs from the successful studio Yuga Labs.
This phenomenon, called “gas war”, is common on Proof-Of-Work (PoW) blockchains such as Ethereum. It occurs when the number of transactions becomes abnormally high during a very short period of time. Problems that should logically be mitigated after the transition of the network to a Proof-Of-Stake (PoS) consensus.
