In short: Ethereum scales with Rollups and Data Availability Sampling (DAS). But what does this mean?
First, let me point out that Ethereum’s roadmap is constantly evolving, so anything you read now may be out of date. Especially all the 2018/19 articles on sharding and “Ethereum 2.0” (yes, those are outdated). Now, here I will briefly describe the situation in February 2022.
Rollups
Rollups are layer 2 and fully inherit the security, decentralization, liquidity and network effects of Ethereum. Currently, multiple rollups are live, of which application-specific rollups such as dYdX, zkSync 1.x, and Loopring are mature and optimized. Smart contract rollups like Optimism, Arbitrum, and StarkNet are in their early stages and await continuous optimization.
Today, optimized rollups are able to achieve transaction fees of $0.10 at 4,500 TPS. Some highly optimized Rollups, like dYdX, can even scale up to 12,000 TPS. Things like dYdX, Immutable X, and Loopring have virtually zero transaction fees because they take advantage of account abstraction. But this is just the beginning, it’s like smart contracts in 2016 right now.
So the next question becomes — how do we push Rollups further?
Rollups and app developers themselves will continue to optimize. We’ve already seen Optimism cut transaction fees by 30% in January, and another 30% cut is on the horizon. Arbitrum also slashed their fees in January, and Arbitrum Nitro estimates it will also cut fees by 50%. This will continue until 2022. Aave developer Emilio describes how they optimized optimistic rollups to reduce transaction fees by 10x to $0.16-$0.25. These are some examples – over time, and as they mature, the cost of Rollups will continue to decrease.
Unlike L1, the more activity, the lower the cost of Rollups. So as Rollups mature, there is more activity, and token incentives, we will see cheaper rollups.
The Surge
The Surge is an upgrade to Ethereum consisting of multiple steps that will open the floodgates for Rollups. First, we will have intermediate steps like EIP-4488 or blob-carrying transactions. These will drop transaction fees by a factor of 5 or more, beyond the two points mentioned above. At least one of these intermediate steps will likely be implemented around the end of 2022.
The final phase of The Surge is danksharding — a data layer built specifically to accelerate Rollups. This integrates Data Availability Sampling (DAS) and brings a new paradigm to blockchain. With data availability sampling, the more decentralized your network is, the more capable it is for rollups. Capacity will continue to increase as bandwidth improves and Ethereum becomes more decentralized. Over time, there will be enough capacity to have millions of TPS in Rollups (enough to make the whole TPS and transaction fee woes out of the question). In the future, we’ll be sitting there laughing and saying we used to worry about gas fees. Danksharding will roll out over time, with the first steps likely to happen in 2023.
Statelessness and zkEVM
With The Surge, Rollups will have massive scale and ultra-low transaction fees. But Ethereum L1 will still be expensive. But it doesn’t matter because end users will be using the Rollups system. Of course, Ethereum L1 will also scale, first through statelessness and then zkEVM in a few years. Even then, the cheapest fees will continue to be on Rollups, which is why most people will just use Rollups.