How are Rollups doing in the post-Cancun upgrade era?

Author: NingNing Source: X, @0x Ning

The core upgrade EIP 4844 of the Cancun upgrade stores the state data of L2 batch to the Ethereum main network in the newly added Blob space.

We know that the design architecture of Rollup is actually reselling the Ethereum main network block space to developers and consumers.

There are two core business models of Rollup:

• Build a truly prosperous Rollup ecosystem, and then make money from the interaction between developers and consumers L1<>L2 Gas price difference and sequencer MEV income. Companies that adopt this business model include: Arbitrum, Optimism (via Superchain Ecosystem), Base, etc.

• Use the expectation of airdrops to continuously engage in Odyssey PUA users, and then make money from the interaction between developers and consumers L1<>L2 Gas price difference and sequencer MEV income. Companies that adopt this business model include: ZkSync, Scroll, Linea, etc.

The Cancun upgrade has extremely compressed the data availability fee from L2 to L1, reducing the average Gas fee of L2 deployed with the Cancun upgrade by 1 order of magnitude.

Ethereum, trying to use the Cancun upgrade to strengthen L1's dominance over the current Ethereum ecosystem of Rollup Centric, and promote the explosive growth of the number of Rollups by reducing costs and increasing efficiency.

But intentionally or unintentionally, it destroyed the economic foundation of Rollup, which adopts the second core business model.

The first to bear the brunt is ZkSync. After the Cancun upgrade, ZkSync supported this new feature as soon as possible, but the effect was poor. The geometric reduction in gas fees did not bring the expected user growth and ecological prosperity, but instead led to a halving of Rollup L1-L2 Gas price difference income.

Because ZkSync has always had an underdeveloped ecosystem, the growth of MEV revenue cannot make up for the sharp decline in L1-L2 Gas price difference revenue. With no other options, ZkSync had to choose the time window of the June rebound to airdrop and partially exit by selling tokens in the secondary market.

And its competitors Scroll and Linea, resisted the pressure from the community and the market, firstly, delayed the deployment of the Cancun upgrade as much as possible, and continued to maintain the high gas fee of L2 to earn the price difference; secondly, they kept the bottom line of not airdropping or issuing coins, and continued PUA user interaction.

From the on-chain data, after February, the Rollup revenue of Scroll and Linea far exceeded that of ZkSync.

I think that before the next Ethereum mainnet Pectra upgrade changes the rules of the game, the Scroll and Linea teams will not have any idea of ​​airdropping coins, and "electronic beggars" should be mentally prepared and manage expectations.

Rollup, which adopts the first business model, has encountered different challenges, the most important of which is the siphoning effect of the Solana MeMe craze on the funds and users of the Ethereum ecosystem.

Fortunately, the SocialFi and MeMe sectors of the Base chain have emerged as a shield for the Ethereum ecosystem to resist the impact of the Solana barbarians, and Rollup revenue has also risen, maintaining the first place for 4 consecutive months.

Since Base is built with OP Stack and is a superchain member of Optimism, Optimism's Rollup revenue also benefits from the positive externalities of Base's prosperity and has grown after the Cancun upgrade.

Arbitrum, once the leader, saw its Rollup revenue decline in April and May due to its excessive bets on Web3 games and slow action on the Rollup Stack strategy, but recovered quickly in July.

Finally, the Cancun upgrade greatly reduced the operating costs of Dapp Rollups, and encouraged more Dapps to choose to adopt the Rollup paradigm for reconstruction (such as Frax, Uniswap, AAVE, etc.).