The Writing is on the Wall: Analyzing the Boom of Inscriptions and its Impact on Rollup Performance and Cost Efficiency

TL;DR

This study analyzes the 2023 surge in inscription-based transactions on EVM chains, revealing cost benefits and security concerns, and highlighting the impact of increased activity on rollup performance and gas fees.

Contribution

First empirical analysis of inscription-driven transaction boom in late 2023, demonstrating effects on rollup performance, costs, and security implications.

Findings

Minting inscription-based meme tokens reduces trading costs.

Increased transaction volume lowers gas fees on zkSync Era.

Blob data storage decreases Ethereum rollup gas costs but raises security questions.

Abstract

Late 2023 witnessed significant user activity on EVM chains, resulting in a surge in transaction activity and putting many rollups into the first live test. While some rollups performed well, some others experienced downtime during this period, affecting transaction finality time and gas fees. To address the lack of empirical research on rollups, we perform the first study during a heightened activity during the late 2023 transaction boom, as attributed to inscriptions - a novel technique that enables NFT and ERC-20 token creation on Bitcoin and other blockchains. We observe that minting inscription-based meme tokens on zkSync Era allows for trading at a fraction of the costs, compared to the Bitcoin or Ethereum networks. We also found that the increased transaction activity, over 99% attributed to the minting of new inscription tokens, positively affected other users of zkSync Era, resulting in lowered gas fees. Unlike L1 blockchains, ZK rollups may experience lower gas fees with increased transaction volume. Lastly, the introduction of blobs - a form of temporary data storage - decreased the gas costs of Ethereum rollups, but also raised a number of questions about the security of inscription-based tokens.