Galaxy Research: Most Bitcoin Layer2 networks may not be able to afford the high Rollup fees and will be unsustainable

Galaxy Research said in a report that the vast majority of Bitcoin Rollups will be unsustainable. Bitcoin Rollups require millions of dollars per year to maintain due to transaction fees. Galaxy researcher Gabe Parker believes: "Each individual data publishing transaction can take up to 400KB (0.4MB) of block space, effectively taking up 10% of the entire block." Since there will be multiple Rollups, and data is expected to be published every 6 to 8 blocks, Rollups may quickly push base layer fees to new highs and make small transactions too expensive. Given the competition for block space, only Rollups that can generate the most fee income and pay block fees can maintain operations. Galaxy researchers estimate that in a low-fee environment, when ordinary transactions cost 10 sat/VB, Rollups will generate $460,000 in monthly fees to maintain Bitcoin's security. When Ordinals or tokens minted through Runes or BRC-20 standards are active, a high-fee environment of 50 sat/VB may result in monthly costs of $2.3 million. Competition for space on the world’s oldest blockchain could create an environment where L2s can’t afford to publish data, testing their ability to stay aligned with Bitcoin. To remain viable, Rollups on Bitcoin will need to generate significant revenue from transaction fees on their own network, thanks to the large number of users who pay to transact on Layer 2.