Blockspace Economics
Blockspace is the most scarce digital resource. It is a finite container of computation, finalized every 12 seconds. The price of this space—Gas—is the heartbeat of the network's economy.
The Gas Auction (EIP-1559)
Before 2021, fees were a blind auction. EIP-1559 introduced an algorithmic pricing model to make fees predictable and efficient.
1. Base Fee (Burned)
The mandatory price to enter the block. It is set by the protocol based on demand.
- • If block is > 50% full, fees go UP.
- • If block is < 50% full, fees go DOWN.
- • This ETH is destroyed (deflationary).
2. Priority Fee (Tip)
An optional "bribe" to the validator to order your transaction before others.
- • Critical for time-sensitive trades.
- • Goes directly to the validator.
Why not just increase block size?
The Centralization Risk
It is trivial to increase throughput by making blocks 100x larger (like Solana or BSC). However, this increases the hardware requirement to run a node.
If trusting the chain requires a $5,000 server and a fiber connection, everyday users cannot verify the ledger. They must trust intermediaries (Infura, Alchemy, Binance).
The Golden Rule: A consumer laptop must be able to verify the chain. If users cannot verify, miners can change the rules (e.g., print more money), and no one would know.
The Modular Scaling Vision
Since L1 blockspace must remain expensive (to keep nodes light), we scale by moving execution elsewhere.
Layer 1 (Ethereum)
The Settlement Layer. Optimized for security/verification, not speed.
Layer 2 (Rollups)
The Execution Layer. Optimized for speed. Executes thousands of transactions, compresses them, and posts a single "proof" to L1.
Frequently Asked Questions
Why do gas fees spike so high?▼
Supply is perfectly inelastic (blocks happen every 12s regardless of demand). Demand is highly elastic. If 10,000 people want to mint an NFT in the same block, the protocol exponentially raises the Base Fee until 9,900 of them give up. It is strict pricing out of demand.
Will Sharding lower gas fees?▼
Directly? No. Sharding (Danksharding) lowers the cost for Rollups to post data to Ethereum. This makes L2s much cheaper (sub-cent fees), but L1 transactions will likely remain expensive premium real estate.
What is "Blob" space?▼
Introduced in EIP-4844 (Proto-Danksharding), Blobs are a new type of temporary data storage attached to blocks. They are specifically designed for Rollups to store their transaction data cheaply, separate from the expensive permanent execution storage.