Ethereum blob market capacity and fee shifts after Pectra upgrade

Expanded data capacity

EIP-7691 increased the target and maximum number of blobs per block. This change expanded the daily data capacity from 5.5GB to 8.15GB. The Pectra upgrade expanded blob capacity and lowered costs for rollups.

Rollups purchased 25,600 blobs daily in the five days following the upgrade. This increase equals 20.8% more blobs than the 21,200 purchased daily pre-upgrade. While rollups purchased 25,600 blobs daily in the five days following the upgrade, the average number of blobs per block remained 33% below the new target of 6 blobs per block. A surplus of space caused blob costs to drop to near zero. Rollups paid less than one-thousandth of a penny daily in blob object fees since the activation, as demand stayed low. The median cost per blob object since Pectra went live reached just $0.00000000035. This creates a large difference compared to the 60 days leading into the upgrade when rollups paid a daily average of $16,250 in blob fees. Before the upgrade, the market purchased 99% of the target rate, but the market purchases only 61% of the target rate now. This difference shows a gap between the 2.7 gigabytes of data capacity purchased pre-upgrade against 3.3GB today.

Rollup margins and node storage

The reduction in data costs improved the profit margins for rollups. Base earned the most net income after onchain costs. Linea and Base maintained percent margins of 98.86% and 98.54% using a seven-day moving average. Transaction costs on top rollups went unchanged or slightly higher since the activation. This happened because the Ethereum layer 1 base fee increased more than 650% week-over-week in the days following the activation. You should monitor your node storage if you run a consensus layer because the increased data volume creates more work. Nodes must hold rollup data for 18 days before they can prune it. This requirement pushed the amount of data consensus layer nodes maintain to an all-time high of 44.6GB. If the current level of demand sustains, consensus layer nodes will have to carry around an estimated 60GB of rollup data. At the target rate, they will have to carry between an estimated 95GB and 100GB. This data load grew because rollups use blobs to bundle transactions and process them off-chain. Before the upgrade, blobs were 82% full on average, but this increased to 86% full post-Pectra.

Fee volatility and ETH burning

Blob fees do not always stay low. A spike in demand can drive the blob base submission fee to $80. This volatility occurs when onchain activity increases and the fee market enters price discovery. Total daily costs paid to purchase and execute blobs fell 51% from an average of $20,660 to $11,015. The amount of ETH burned from rollup data posting fell 71% after the activation. Daily burning dropped from 11.22 ETH to 3.26 ETH. Since Pectra, 99.99% of the total burned ETH comes from base fees of type-3 execution layer transactions. In the seven days following the spike mentioned by analysts, blob fees burned over 166 ETH worth $560,000. How will the market react when demand finally meets the new target rate?