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How Modularity and Rollups Impact ETH Value | Galaxy

galaxy.com · 4,513 words · saved by 1 readers

The forthcoming Cancun/Deneb upgrade on Ethereum is expected to reduce fees paid by rollup operators for block space and thus, in the near term, act as a headwind to Ethereum’s fee-derived protocol revenue. ETH may underperform as a result, especially as rollups built atop Ethereum become increasingly interoperable with other more performant and comparatively cheaper settlement and data availability chains. Over the long-term, if the blockchain modularity thesis proves correct, then the main network fee drivers for Layer-1 blockchains like Ethereum and Celestia will be Layer-2 rollup service providers, instead of end-users. Because of this and the growing adoption of account abstraction on Layer-2’s, the primary individuals holding ETH for the purpose of block space payment is expected to be rollup operators instead of end-users. An age-old question in the crypto industry is how to scale blockchains while still maximizing (or at least maintaining) the properties of network decentraliza

Executive Summary The forthcoming Cancun/Deneb upgrade on Ethereum is expected to reduce fees paid by rollup operators for block space and thus, in the near term, act as a headwind to Ethereum’s fee-derived protocol revenue. ETH may underperform as a result, especially as rollups built atop Ethereum become increasingly interoperable with other more performant and comparatively cheaper settlement and data availability chains. Over the long-term, if the blockchain modularity thesis proves correct, then the main network fee drivers for Layer-1 blockchains like Ethereum and Celestia will be…

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