DA scaling and L1 blockspace value: response to Ryan Watkins
Quote494 words
Responds to three points on L1 blockspace: DA supply can be scaled as demand grows, network effects in DA are softer than in shared-state blockspace, and value capture will shift to apps via gas redistribution and MEV sharing.
Key claims
DA demand is far below supply so scarcity is not the current constraint
Ethereum blockspace is more valuable due to L1 MEV, which pure DA layers lack
Gas monetization and MEV redistribution to apps will grow
Agree on ( 1 ) in the long-term. ⤵️
However, we can't just focus on future-proving everything for the mass adoption narrative down the line. @CelestiaOrg and @AvailProject both have roadmaps to significantly scale DA, and @eigen_da can also scale throughput linearly with operator bandwidth, basically extending Ethereum blob space elastically as the system matures.
Demand is not nearly enough rn to meet all the supply. Hence, I think we're already in a pretty comfortable spot here imo and some pretty cool stuff can already be built.
As actual demand grows, supply can be scaled further. In the meantime, it's rly exciting for me to see that this new-found abundance of block space and DA already allows for new network designs and use cases (e.g. altVMs on L2, etc) to emerge.
However, all the block space and surrounding infra (including general purpose execution layers here) that has been built in the past months and years, is yet to give rise to apps that are so EV+, fun and/or easy to use that they gain broader adoption and relevance.
Agree on ( 2 ) as well. ⤵️
Network effects (both soft and hard) do matter with regards to the long-term adoption of the blockspace a decentralized system makes available. With soft I refer to mindshare, community etc., while hard is related to the shared state @RyanWatkins_ points out below.
DA is similar imo. However, there is a qualitative difference between the two in that value of blockspace depends on the chain state. That means for example Ethereum blockspace is more valuable due to L1 MEV, which doesn’t apply to a "pure" DA layer without any orchestrating infra like a sequencer that can extract/redistribute MEV.
The hard network effects in the case of DA are hence less tangible rn and basically come down to technological features such as for example DAS (supported by Avail and Celestia, soon EigenDA), which significantly improves end user DA verifiability, and provides a same basis to inter-connect the rollups based on the DA layer in a more coherent way down the line.
@CelestiaOrg is also a great example of leveraging the soft network effects of the ecosystem narrative around it and the resulting high degree of mindshare to increase adoption.
Agree on ( 3 ) as I believe that gas fee redistribution to apps (see @0xSonicLabs) will become increasingly popular. ⤵️
Additionally, (cross-chain) MEV will become increasingly valuable and important too. It will likely accrue back to users and fees per transaction for the end user will ultimately trend towards zero.
Application-specific sequencing is also a hot topic in this context as it shifts some of the value capture from L1 to the app (preventing apps from moving to fully app-specific network designs themselves).
Gas monetization for apps, MEV redistribution to protocols & ultimately users, subsidized transaction fees and gasless app interactions will be key to enable the next generation of apps and sustainable value accrual models for app layer tokens.
QUOTING @RyanWatkins_
3 thoughts about L1 blockspace. 1. We don’t have enough — data availability and bandwidth need to 1,000x 2. It is not fungible — shared state creates network effects and access to that state will continue to command a premium 3. Value capture will increasingly be monetary-driv
3 thoughts about L1 blockspace. 1. We don’t have enough — data availability and bandwidth need to 1,000x 2. It is not fungible — shared state creates network effects and access to that state will continue to command a premium 3. Value capture will increasingly be monetary-driv
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