According to BlockBeats, this article provides a comprehensive analysis of Data Availability (DA) and its potential in the blockchain market. The core business of blockchain is selling block space, which is nearly monopolistic due to the difficulty of substituting block space between different chains. However, not all monopolies yield excessive profits; the key lies in the ability to price discriminate among consumers.
In blockchain, priority fees serve as an effective price discrimination mechanism. Transactions with the highest priority pay significantly more than the median. Layer 2 (L2) solutions and Solana leverage the priority of sorters to achieve high throughput and revenue. Marginal transactions pay very low fees, supporting high transactions per second (TPS), while price-insensitive transactions contribute most of the network's income.
A sample of five blocks from Base L2 shows a clear Pareto distribution, making price discrimination highly effective. The top 10% of transactions contribute 30% of the revenue, while the bottom 10% contribute less than 1%. The issue is that while sorters profit from this, the DA layer cannot participate due to its inability to price discriminate. All transactions, whether high-value arbitrage or low-value spam, pay the same fee on Ethereum's DA layer because they settle in the same batch.
High TPS can only be achieved if median transactions can be on-chain at near-zero cost. However, in the DA layer, every transaction pays the same fee. The DA layer can either have high throughput or high revenue, but not both. This makes it nearly impossible for rollups to scale without affecting Ethereum's network revenue. The rollup-centric roadmap is flawed because it sacrifices the valuable part of the network (sorting) and mistakenly believes it can be compensated by the less valuable part (DA).
Initially, there was optimism about the rollup-centric roadmap, assuming that rational actors would recognize the economics of price discrimination and that it could develop alongside L1 scaling. High-value, price-insensitive users would choose L1 for its persistence, security, and finality, while L2 would cater to marginal low-cost users excluded by high L1 fees. Thus, Ethereum could still earn substantial sorter rent.
However, Ethereum's leadership has repeatedly emphasized that L1 as an application layer is no longer important and will not scale. Consequently, users and developers have responded rationally, leading to a decline in the L1 application ecosystem and a decrease in Ethereum's network revenue. If ETH's long-term value lies in being a monetary asset, this approach might work by making more people hold ETH as a persistent form of money. But if ETH's value is as a widely-used protocol's network stake, value accumulation is necessary. Clearly, there has been a misstep due to incorrect economic assumptions.
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