Where Will the Next Billion Crypto Users Pay for Gas?

Since the DeFi Summer demonstrated the vast potential of permissionless blockchain-based code, users and developers have been exploring new applications for this revolutionary technology.
Initially, certain use cases seemed impractical for blockchain implementation due to high computational costs and slow transaction speeds. During the last cycle, we have all experienced tremendously expensive gas fees on Ethereum for even simple swaps or transfers.
Back then, everyone was searching for the “Ethereum killer” among alternative Layer 1 solutions seeking a faster, cheaper and more scalable platform.

With the internet transitioning towards decentralization, we anticipate the onboarding of billions of new users.
This shift raises the question: Which platform will users and developers adopt. What approaches will satisfy this increasing demand and which of them are sustainable in the longrun.

In this article, provided by our dedicated researcher, Adam Novocký, we’ll explore the survivors of the Layer 1 race and introduce new contenders aiming to meet the growing needs of crypto users.
We’ll delve into Ethereum’s significant upgrades, particularly its shift toward becoming a settlement layer supported by various Layer 2 solutions.
Let’s begin by examining how Ethereum is evolving to accommodate future growth. 

Upgrading Ethereum

Ethereum has undergone a few significant upgrades since the last cycle, most notably the introduction of proto-danksharding via EIP-4844.
This upgrade allows Layer 2 solutions (L2s) to post binary large objects—“blobs”, which are essentially compressed transactions—more efficiently, thereby reducing gas fees and storage costs. 

This is a significant step towards Ethereum becoming the settlement layer for various L2s. Now, let’s take a look at the Layer 2 solutions that are an integral part of this transition.

Rollups

Many have tried to speed up, or optimize the computation done on Ethereum. This involves performing some computation off-chain and writing the proof back to Ethereum.
This approach increases speeds and lowers prices while retaining the economic security of Ethereum. Let’s take a look at these approaches.

Optimistic

Starting with Optimism, which utilizes its EVM-equivalent environment to perform most of the computation off-chain. It optimistically assumes the validity of the computation and posts it to the Ethereum mainnet, with a 14-day window for someone to dispute this validity.
Optimism also introduced its OP Stack, which serves as the foundation for other rollups like Base (which on its own has more activity than OP and ARB combined, usually taking the 3.-4. spot in activity metrics), and depending on how much they comply with its specifications, they can be part of the Superchain.

Similarly, the leader among optimistic rollups is Arbitrum. Although the main architecture may seem similar at first glance—same off-chain computation, same fraud-proof mechanism, and optimistic validity assumption—there are some differences.
Both Optimism and Arbitrum aim for EVM compatibility, meaning that contracts can be deployed without modification. Optimism even reached EVM equivalence, thus the differences are as minimal as they can be.

Arbitrum has also introduced Stylus, a new virtual machine that allows developers to write code in WebAssembly languages such as Rust, C, or C++.
Nevertheless, optimistic rollups are popular for their speed, affordable execution prices, and relative simplicity. 
Arbitrum leads with around 500,000 daily active addresses and 1.5–2 million daily transactions, while Optimism has approximately 80,000 daily addresses and 700,000 daily transactions.

ZK Rollups

In contrast to optimistic rollups, zero-knowledge (ZK) rollups post their off-chain computed state to the main chain along with a cryptographic proof. This process is more computationally expensive, but once the proof is generated, the state is final, eliminating the need for fraud proofs. However, zero-knowledge circuits are very complex, making it even harder to achieve EVM compatibility or equivalence.

These proofs, along with the transactional data—usually in compressed form—are submitted to the mainnet. Notable ZK rollups include zkSync Era, StarkNet, Scroll, and Polygon zkEVM.
The activity on these rollups is quite low, possibly because they are still in their early stages or don’t have many applications deployed yet.
Usually, zkSync leads with approximately 70,000 daily active addresses, and Scroll goes head-to-head with StarkNet at around 300,000 transactions per day.

Validium

Validium rollups allow for even more efficiency and cost reduction by using off-chain data availability. Only the cryptographic proofs are posted to the mainnet, while the data itself is kept with off-chain data availability providers.
One of the protocols using Validium is StarkWare’s StarkEx, which powers applications like dYdX and Immutable X. Polygonis also exploring Validium solutions.

Polygon has multiple products: the Polygon zkEVM Rollup, which posts both the data and proofs to Ethereum, and plans for Validium solutions that post only the proofs to Ethereum while the data goes to data availability providers.

Volition

Volition is a hybrid approach that allows users to choose on a per-transaction basis whether the data is stored on-chain (as in ZK Rollups) or off-chain (as in Validium).
This flexibility enables users to balance security and cost according to their needs, without switching chains. This is particularly optimal for games, for example.
For generic, non-rare items you don’t really care about, you can just post them to Validium, but for rare items you might want to show off to your friends or trade, you can post those to the mainnet.

TeeRollups

A new possible option for a rollup architecture is TeeRollup. It allows heterogeneous (Intel SGX, Intel TDX, AMD SEV …) Trusted Execution Environments (TEEs) to verify the off-chain computation and only post the signatures to the mainnet, while allowing for withdrawing the rollup balance even when the set of decentralized sequencers is unavailable.
Yes, you read that right—decentralized sequencers, the one thing most of the live projects are missing. TeeRollups are not live yet, but there is an interesting research paper available that implemented this architecture in Golang.
If you are interested, check it out on arXiv.

Based Rollups

Speaking of sequencers, there is one more rollup approach to cover, Based Rollups. As we’ve mentioned, Layer 2 (L2) sequencers post L2 data and proofs to the mainnet.
Currently, these sequencers are mostly run by the project’s foundation—for example, Arbitrum—but in the future, they will become decentralized sets of sequencers.
Validators on the Layer 1 (L1) mainnet—the base chain—could also act as a decentralized set of sequencers for L2s, inheriting the L1s liveness and decentralization.
Therefore, a rollup is considered Based, when  the transaction ordering is dictated by the L1 and any L1 proposer can permissionlessly include the next L2 block in the L1 block. Taikois an example of a project building such a rollup.

Sidechains

One of the earliest scaling solutions, employed by the early Polygon, sidechains are EVM compatible for the most part and have their own consensus mechanisms. They are connected to the Ethereum mainnet via a two-way bridge.
Well, “were” past tense. 

Parallel L1s

In blockchains, transactions are typically executed sequentially. The exact order of transactions is determined by block builders, often capturing some Miner Extractable Value (MEV), and then executed in that order to form a new block.
Parallel Layer 1s allow for computing the new state of the blockchain in parallel. This means we can significantly increase the transaction throughput and even the finality.
There are three main protocols building parallelized Layer 1s.

Monad

Monad is a fully EVM-compatible, high-TPS blockchain secured by a Proof of Stake consensus. It offers developer familiarity with EVM chains while boasting 10,000 TPS. It is not live yet.

Sei

Sei is built using the Cosmos SDK and optimized for DEXes and DeFi use cases. It employs the Tendermint BFT consensus and supports smart contracts written in CosmWasm (WebAssembly).
Sei has a modest 50,000 daily active addresses but around 5 million daily transactions (97% of which is using the “Sei voting” contract).

Sui

Sui introduces an object-centric data model which allows for parallel execution of transactions that are not dependent on each other.
It uses the Move programming language developed by Facebook, in combination with the novel DAG-based Narwhal&Tusk consensus mechanism, which allows for sub-400ms finality.
Sui has been on a steep rise both activity-wise and price-wise. Almost half of the activity originates from a dApp called RECRD, which could be described as TikTok but with 100% revenue share on the blockchain. 

Fantom (Sonic soon)

Let us not overlook Fantom and its impending upgrade and rebranding to Sonic. While Fantom previously lacked uniqueness, the rumors regarding Sonic and its underlying technology has sparked significant interest. 
From a technical perspective, Sonic is an EVM-compatible Layer 1 blockchain, incorporating a novel consensus mechanism called Lachesis. This protocol leverages Proof-of-Stake and Directed Acyclic Graph (DAG) technology to create a leaderless, asynchronous Byzantine Fault Tolerant consensus.
Sonic not only promises impressive performance metrics, including up to 10,000 transactions per second and sub-second finality, but also substantially reduces node storage requirements by 90% thanks to live pruning and CarmenDB.

The tokenomics of Sonic are equally promising, particularly with the introduction of the FeeM (meme potential here) gas monetization model.
This mechanism allows dApps participating in FeeM to receive up to 90% of the gas fees they generate, with the remainder allocated to validators.
For non-participating dApps, 50% of the gas fees are burned, while the rest is distributed between validators and the ecosystem vault. Furthermore, Sonic has devised a balanced inflation and staking strategy, positioning it as an attractive platform for both developers and users.

While Fantom has garnered some attention and activity, the true innovation is yet to materialize. The launch of Sonic, scheduled for November/December, will allow a 1:1 redemption of $FTM for $S tokens.
The crypto community awaits with anticipation to observe Sonic's performance. On paper, it appears well-positioned to attract significant user and developer interest, especially considering that approximately 88% of its tokens are in circulation, and its current valuation stands at merely one-tenth of Sui’s.

Near

NEAR has been present throughout the last cycle and was even back then dubbed as the chain that solved sharding. Since then, it hasn’t slowed down; on the contrary, it is growing rapidly, leading to a need for more capacity. 
The network increased its shards from 4 to 6 to handle more transactions smoothly.
This upgrade boosts the network’s capacity by 50% and was implemented without any disruption to the system, ensuring users continue to have a fast and stable experience.

NEAR hosts 3 of the top 10 dApps by usage and users, notably Kai-Ching and HOT Wallet, both reaching millions of users daily.
Usage-wise, NEAR consistently maintains 5–7 million daily transactions and 2.5–3.5 million daily active addresses.

Solana

Solana has established itself as a high-performance blockchain, boasting approximately 4–5 million daily active addresses and reaching up to 40 million daily transactions.
Its unique architecture enables rapid transaction speeds and low fees, making it a popular choice for developers and users alike. Moreover, there is the concept of Ephemeral Rollups on Solana.
This means that for fully on-chain games, players can copy the blockchain state and create a dedicated rollup for the duration of the game.
Once the game is completed and the players agree on the outcomes—such as who won and the distribution of assets—these updates are posted to the main chain, updating its state, and the rollup can then be discarded.

One of the factors contributing to Solana’s popularity is its thriving meme coin culture. The network has become a hotspot for meme coins like BONK and WIF, attracting a vibrant community that actively engages in trading and promoting these tokens everywhere.
This has significantly increased on-chain activity and community engagement, showcasing the network’s ability to handle high volumes of transactions without compromising performance.

In the DeFi landscape, Solana is making significant strides, with platforms like Jupiter leading the way.
Jupiter serves as a key liquidity aggregator on Solana, allowing users to find the best trade routes and prices across various decentralized exchanges.
This positions Jupiter as a central hub in Solana’s DeFi ecosystem, enhancing the user experience for traders and liquidity providers while contributing to the network’s overall growth.
Not to mention, all the new developments presented at Breakpoint this year have further boosted the ecosystem.

Looking ahead, one of the most anticipated developments for Solana is the upcoming Firedancer client. 
Developed by Jump Crypto, Firedancer aims to significantly enhance Solana’s throughput—potentially up to 1 million transactions per second—and improve network efficiency by introducing a second, independent validator client.
This could provide more resilience against downtimes and push the network’s capacity even further, potentially making Solana one of the fastest and most scalable blockchains in the industry.

Conclusion

While the blockchain industry has made remarkable strides in scaling and performance, from Layer 2 solutions to parallel execution and novel consensus mechanisms, we must remember that technology alone is not enough.
The next frontier in crypto adoption lies in bridging the gap between these powerful innovations and everyday users.

To onboard the next billion users, we need to shift our focus towards creating intuitive interfaces, seamless onboarding processes, and compelling applications that showcase the unique benefits of blockchain technology.
The true measure of success will be in how effectively these platforms can blend their technical prowess with user-centric design and practical utility.

As we move forward, the challenge is not just to build faster or more efficient systems (even though many say we still need more infra), but to make blockchain technology accessible and valuable to the average person.
By striking this balance, we can create an ecosystem that not only satisfies the growing demand for scalable solutions but also drives mainstream adoption through meaningful, user-friendly experiences.