Ethereum co-founder Vitalik Buterin recently drew attention to the predicted cost of “blobs” on the Ethereum network, highlighting potential economic ramifications. Blobs, introduced by Ethereum Improvement Proposal (EIP) 4844, are data bundles roughly 125 kilobytes in size that can be attached to transactions.
Buterin compared current data transmission costs on Ethereum with projections from Polymarket, a prediction market platform. According to current gas prices, transmitting 125 kB of data (calldata) costs approximately 0.06 ETH.
In contrast, Polymarket forecasts the price of blobs to be around 0.001 ETH. This significant disparity suggests that EIP-4844, if implemented, could drastically reduce data storage costs on the Ethereum network.
Polymarket is predicting that blobs (~125 kB) will cost ~0.001 ETH.
Today, 125 kB calldata costs ~30 gwei per gas * 16 gas per byte * 125000 gas ~= 0.06 ETH
And if you think polymarket’s guess that blobs will be 60x cheaper is over-optimistic, you can use the market to hedge! pic.twitter.com/vUwJInNhCP
— vitalik.eth (@VitalikButerin) March 3, 2024
What is EIP-4844?
EIP-4844 proposes a three-part solution to tackle blockchain’s scalability issues. Firstly, it introduces Type-3 transactions, which enable users to attach blobs directly to their transactions. This offloads non-critical information from the main ETH chain, freeing up space and potentially reducing transaction fees.
Secondly, the proposal introduces blob storage, allowing a limited number of blobs to be temporarily stored on beacon nodes (validators) for a specific time frame. Finally, a blob base fee mechanism is implemented to incentivize validators to include these blobs in blocks. This ensures the continued availability of the data while preventing excessive storage that could strain the network.
How to hedge by Vitalik Buterin
Beyond cost reductions, Buterin suggests that Polymarket’s predictions could serve as a valuable tool for stakeholders within the Ethereum ecosystem. By understanding the market’s anticipated cost of blobs, participants can potentially hedge against price fluctuations, contributing to a more stable and predictable environment.
It is important to note that EIP-4844 is still under development and its implementation timeline is uncertain. However, the potential cost savings and increased scalability offered by blobs highlight the ongoing efforts toward a more efficient and cost-effective Ethereum network.
