Compared to its rivals, Taiko, an Ethereum layer-2 scaling network, is investing a significant amount of money in blobs, but that is intentional.
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After being online in late May, the Taiko protocol aims to provide users with faster and less expensive transactions than those on the Ethereum mainnet, all while utilizing some of the network’s security features. Taiko has spent an astounding $900,000 on blobs in less than two weeks since going online in an effort to direct user transactions to the Ethereum network.
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Competitors of Taiko, such the Optimism network, seldom ever spend more than $1,000 a day on Blob-related costs. Blobs were touted as a new resource for layer-2 scaling networks to post Ethereum transactions more affordably when they were first introduced in March as part of an Ethereum upgrade.
The creator of the protocol, Taiko Labs, revealed in March that it had completed a $15 million Series A financing round. By incorporating “zero-knowledge” cryptography into its design, Taiko is attempting to set itself apart in an industry where scalable networks abound and competition is fierce.
Taiko Laboratories CEO Daniel Wang sent a written comment to Decrypt stating, “Taiko just launched its mainnet, and there’s a lot to be figured out before it becomes stable.” “We anticipated using blobs more frequently than other layer-2s. This is not a bug; this is a design choice.
In order to execute batches of transactions on a different chain and publish the results back to Ethereum, Layer-2 networks frequently group transactions together. That formula, however, does not apply to Taiko’s design, since a large number of transactions are aggregated into batches in another location.
Sequencing, the process of placing transactions in order, happens on Ethereum itself instead. This method, known as “base sequencing,” according to Taiko Labs, is more decentralized than other layer-2s that rely on centralized sequencers, which are managed by a network’s development team and take a little cut of user fees.
In an interview with Decrypt, co-founder of the Bitcoin layer-2 network BOB Alexei Zamyatin said, “That sounds expensive.” It increases security, but not as much as Ethereum, and it costs a lot more than most layer-2 protocols.
A trade-off game
However, Wang said that if “Taiko is fully utilized by users,” meaning that gas fees are sustained, the expenses related to Taiko’s functionality might easily approach the break-even point.
Wang went on to say that Taiko is well aware of the advantages and disadvantages of its sequencing technique and that he expects Ethereum researchers will examine Taiko’s on-chain data in order to investigate potential enhancements that might make Ethereum more capable of supporting scaling networks of a similar nature.
According to certain Ethereum experts, like as Justin Drake, Taiko’s group is developing a novel method of decentralized sequencing that has the potential to overcome significant obstacles in Ethereum’s ecosystem.
In a written statement, he told Decrypt, “It is making a leap forward in the decentralization, credible neutrality, and composability of rollups.”
He said that fragmentation issues holding up the entire sector may be resolved if additional layer-2 networks moved the sequencing of their transactions to Ethereum itself. Currently, assets and liquidity are mainly dispersed over many layer-2s, which effectively isolates users and apps within a particular scaling solution even though they are all connected to Ethereum.
The incorporation of blobs signified a notable transformation in the way layer-2 networks on Ethereum interacted with the underlying blockchain. Layer-2s could only post bundled transactions in the form of Ethereum “calldata,” a space where data could be stored within transactions, prior to blobs becoming available as a separate fee market.
As an alternative to trafficking user transactions in bulk alongside normal Ethereum activity, blobs function something like a dedicated highway lane, where lower traffic can result in lower costs. It’s still up for debate, though, how best to bundle those transactions before they ship.
Blobs blobs blobs
Centralized sequencers can occasionally be used to bring a network to a complete stop, piercing the illusion of permissionless activity that characterizes cryptocurrency. Transactions can also be pushed back occasionally by abusing centralized sequencers. However, one of Taiko’s community supporters believes that its decentralization pledge might not be the most effective.
“Sadly, it’s kind of expensive,” the pseudonymous crypto researcher arixon.eth said on Twitter (aka X). “Because of based sequencing, we need to post a blob every 12 [seconds], and if there aren’t enough [transactions], then we just won’t fill the blobs.”
Because of based sequencing, we need to post a blob every 12s and if there aren’t enough txs then we just won’t fill the blobs
Sadly it’s kinda expensive, so we really need based preconfs
— arixon.eth (@arixoneth) June 1, 2024
Wang of Taiko Labs stated that the Taiko community is “considering lowering the block proposing frequency a bit” and that altering this tempo could be a potential solution implemented shortly.
Taiko is one of the biggest users of blobs because of their continuous flow, no matter how filled they are. For instance, a well-known Dune dashboard indicates that Taiko uploaded 25% of all blobs on Ethereum on Sunday. Taiko paid around $63,000 in fees relating to blobs that day.
Taiko paid $123,000 in fees for blobs on Thursday, marking its second consecutive day with a six-figure charge total. This amounts to 73% of all costs paid for them across layer-2s. Additionally, although most layer-2s convey cost savings through reduced fees to their customers, Taiko currently pays a premium for decentralization; users are not responsible for this bill.
The procedure may be changed in the future to ensure that “blocks are missed until there are enough [transactions] in the mempool for a proposer to push a block to [Ethereum] profitably,” according to arixon.eth. “For now, it’s partially subsidized by the team.”
According to L2BEAT, during the network’s initial airdrop of TAIKO tokens, the native cryptocurrency of the network, on Wednesday, layer-2 averaged 6.42 transactions per second. Ethereum, meanwhile, recorded about 13.6 transactions every second.
The performance of Taiko’s token has been erratic thus far. As of this writing, the token’s price had rebounded to $2.45, indicating a nearly 3% fall over the previous day, according to CoinGecko. An hour after its introduction, the token crashed 40%, to $2.27 from $3.80. 
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