Ethereum fork introduces dynamic blob fees for improved L2 scaling

Ethereum (CRYPTO:ETH) developers are preparing to implement a new Ethereum Improvement Proposal (EIP-7742) as part of the upcoming Pectra fork, aimed at enhancing the network’s scalability. 

The proposal, announced on October 17, introduces dynamic blob fees to optimize blob-carrying transactions, which are crucial for making Layer 2 transactions more affordable.

Blobs, large temporary chunks of data in Ethereum transactions, were first introduced during the Dencun upgrade in March 2024. 

With the current blob count nearing capacity, Ethereum co-founder Vitalik Buterin warned that scalability could soon stall. 

EIP-7742 addresses this issue by allowing Ethereum’s consensus layer to dynamically adjust blob gas targets and maximum values, improving flexibility and scalability.

Christine Kim, Galaxy Digital’s VP of Research, noted, “It’s likely a blob count increase will also be included in Pectra,” highlighting that this upgrade could significantly impact Ethereum’s Layer 2 performance. 

Ethereum developer Alex Stokes explained that a more flexible blob count would reduce the current rigidity, helping Layer 2 networks process transactions more efficiently.

The Pectra fork is expected by late 2024 or early 2025, with another proposal, EIP-7623, potentially reducing Ethereum’s maximum block size to free up more blob space. 

These changes align with Buterin’s vision for Ethereum’s network to achieve 100,000 transactions per second.

However, the shift toward Layer 2 solutions has led to a decline in Ethereum’s mainnet revenue. 

Over the past four months, the revenue ratio between Ethereum and its Layer 2s has been 10:90. 

According to VanEck’s Matthew Sigel, this trend may impact Ether’s price, potentially lowering the firm's 2030 price target for ETH to $7,330, down from $22,000.

At the time of writing, the Ethereum (ETH) price was $2,619.18.