Is Rollup currency overvalued or undervalued? The future of Rollups

Is the price of Rollup currency overvalued or undervalued? The future of Rollups! We believe Rollups have irreplaceable value. A more rational cost structure could also improve Rollups' resilience in the face of market changes. Continuous investment brought by healthy cash flow is the source of competitiveness. Protocols with advantages in profit margins will naturally have higher valuations and long-term competitiveness.

Today, the editor of this website will share with you the economic structure of Rollups and look forward to the future possibilities. Friends who need it can take a look together!

Background

Currently, the Ethereum Rollup L2 ecosystem has begun to take shape. The overall single-day TVL exceeds $37b, which is more than 3 times that of Solana and more than ⅕ of Ethereum. From a user's perspective, the recent average daily number of mainstream L2 users has reached 158k, exceeding Solana's data of about 100k.

However, the short-term performance of Rollups’ currency price is not as good as expected. In terms of market value, among the mainstream rollups, Arbitrum has a market value of $7.8b, Optimism has a market value of $7.3b, Starknet has a market value of $6.9b, zkSync FDV has just completed an airdrop of $3.5b, and Solana’s FDV reached $74b during the same period. Recently, zkSync has been launched recently, and its poor market performance has not met market expectations for Rollups.

From a revenue perspective, Ethereum’s revenue reached $2b in 2023, while the annual revenue of Arbitrum and Op Mainnet, which performed better in the same year, reached $63m and $37m respectively, which is a big gap with Ethereum. . Base and zkSync, which are new entrants to the market and performed better this year, earned $50m and $23m in revenue respectively in the first half of 2024, while Ethereum generated $1.39b in revenue during the same period, and the gap has not narrowed. Rollups has yet to achieve the revenue scale that rivals Ethereum.

The current low activity of some Rollups is certainly a reason. This is a problem faced by most public chains. What we want to know more is how well Rollups is fulfilling its mission as a Mass adoption infra, and is its value being underestimated due to its current low activity?

Everything still has to go back to the original proposition. The birth of Rollups originated from the increasing congestion of Ethereum, and the fees reached a level that was unacceptable to users. Therefore, Rollups was born with the purpose of “reducing transaction costs”. The advantages of Rollups, in addition to the well-known L1 level security of Ethereum, also include its disruptive cost structure. The so-called "the more users, the cheaper Rollups".

If this can be implemented well, we believe that Rollups will have irreplaceable value. A more rational cost structure could also improve Rollups' resilience in the face of market changes. Continuous investment brought by healthy cash flow is the source of competitiveness. Protocols with advantages in profit margins will naturally have higher valuations and long-term competitiveness.

This article briefly analyzes the current economic structure of Rollups and looks at future possibilities.

1. Business model of Rollups

1.1 Overview

The Rollups protocol uses Sequencer as the revenue and expenditure point, charging users for transactions on Rollups to cover the costs incurred on L1 and L2, and to obtain additional profits .

On the revenue side, the fees Rollups charges users include:

• Basic fees (including congestion fees)
• Priority fees
• L1 related costs and fees

Potential fees that can be captured by the protocol’s own strategy include:

• MEV cost

Cost side, including L2 execution cost which currently accounts for a relatively small proportion and L1 cost which accounts for the main part, including:

• DA cost
• Verification cost
• Communication cost

Rollups compared to other L2 The business model differs in its cost structure. For example, the DA cost, which accounts for the largest proportion, is regarded as a variable cost that changes with the amount of data, while the verification cost and communication cost are regarded more as fixed costs to maintain the operation of Rollups.

From the perspective of business model, we hope to clarify the marginal cost of Rollups, that is, to what extent the new cost of an additional transaction can be less than the average cost of each transaction, to verify the specific extent to which "the more users, the cheaper Rollups" is established. .

The reason behind this is that Rollups batches data processing, data compression, and verification aggregation, resulting in higher efficiency and lower marginal cost than other public chains. Theoretically, the fixed cost of Rollups can be well amortized into each transaction, so it can even be ignored if the transaction volume is large enough, but this also needs our verification.

1.2 Rollups income

1.2.1 Transaction fee income

The main income of Rollups comes from the transaction fee, which is gas. The purpose of the fee is to cover the cost of Rollups and obtain a part of the profit to hedge the risk of long-term L1 ga s changes. and obtain part of the profits. Some L2s will charge transaction priority fees to allow users to prioritize urgent transactions.

Aribtrum and zkSync adopt the FCFS mechanism, that is, the order of transaction processing is first come, first processed, and do not support "queue jumping" requests. The OP stack has adopted a flexible approach to such issues, allowing "queue-jumping" of transactions by paying a priority fee.

Source: IOSG Ventures

For users, the cost of Rollups L2 will be determined by the lower base fee when they are less active on the chain. When the chain is relatively busy, each Rollups will determine the degree of congestion and charge congestion fees (often rising exponentially).

Since Rollups’ L2 overhead is extremely low (only off-chain engineering and operation and maintenance costs), and the execution costs charged are highly autonomous, almost all the revenue used by users to pay L2 fees will become the profit of the protocol. Due to the centralized operation of the Sequencer, Rollups has control over the lower limit of the basic fee, congestion fee, and priority fee. Therefore, the L2 execution fee will be a "parameter" game of the protocol. Under the premise that the ecosystem is relatively prosperous and the price will not attract users' resentment. Under the circumstances, the execution cost can be freely designed.

Source: David_c @Dune Analytic

1.2.2 MEV income

MEV transactions are divided into malicious MEV and non-malicious MEV, where malicious MEV is a front-running transaction similar to a sandwich attack, more about robbing The value of the user's transaction, for example, in a sandwich attack, the attacker will insert his own transaction before the user's transaction, causing the user to buy at a higher price or sell at a lower price, which is the so-called "sandwich".

Non-malicious MEV is a back-running transaction such as arbitrage and liquidation. Arbitrage behavior can balance prices between different exchanges and improve the effectiveness of the market; liquidation behavior can remove bad leverage and reduce system risks, and is regarded as is beneficial MEV behavior.

Source: IOSG Ventures

Unlike Ethereum, Rollups does not provide a public mempool, only the sequencer can see the transaction before it is finalized, so only the sequencer has the ability to initiate L2 chain MEV, since most L2s are now centralized sorters, malicious MEV is unlikely to exist for the time being. Therefore, the current MEV income will need to consider arbitrage and liquidation types.

According to the research of Christof Ferreira Torres and others, they replayed the transactions on Rollups and concluded that Arbitrum, Optimism, and Zksync have non-malicious MEV behavior on the chain. The three chains currently generate a total of $580m of MEV. Value enough to be a worthy source of income.

Source: Rolling in the Shadows: Analyzing the Extraction of MEV Across Layer-2 Rollup

1.2.3 L1 related costs

This part is the fee charged by Rollups to users to cover L1 related costs. The specific cost components will be discussed later. Different rollups are charged in different ways. In addition to the cost of predicting L1 gas to cover L1 data, Rollups will also incur additional fees as a reserve fund to deal with the risk of future gas fluctuations, which is essentially an income for Rollups. For example, Arbitrum will add a "Dynamic" fee, and OP stack will multiply the fee by the "Dynamic Overhead" factor. Before the EIP4844 upgrade, this cost was estimated to be about 1/10 of the DA cost.

1.2.4 Profit Sharing

Base will have a relatively special profit sharing due to the adoption of OP stack. Base promises to contribute 2.5% of the total revenue/15% of the profit from the L2 transaction after deducting the cost of submitting data to L1. Choose the highest value and give it to the OP stack. In return, Base will participate in the on-chain governance of OP Stack and Superchain and receive up to 2.75% of the OP token supply. Judging from recent data, Base’s revenue contribution to Superchain is 5 ETH/day.

We can find that Base provides Optimism with a significant proportion of revenue. In addition to cash flow, healthy network effects also make the OP Stack ecosystem more attractive in the eyes of users and the market. Although Arbitrum has some performance such as TVL or stablecoin market capitalization higher than Base + Optimism, it is currently unable to surpass the latter's trading volume and revenue. This can also be seen from the P/S ratio of the two - after considering Base income, $OP's PS ratios are 16% higher than $ARB, reflecting the additional value that the ecosystem brings to $OP.

Source: OP Lab

1.3 Rollups cost

1.3.1 Ethereum L1 data cost

The specific cost structure of each chain is different, but the broad categories can be basically divided into communication costs, DA costs, and verification costs unique to ZK Rollups

Communication costs: mainly include status updates between L1 and L2, cross-chain interactions, etc.

DA cost: including publishing compressed transaction data, state root, ZK proof, etc. to the DA layer.

Before EIP4844, the main cost of L1 cost came from DA cost (more than 95% for Arbitrum and Base, more than 75% for zkSync, and more than 80% for Starknet)

After EIP4844, DA cost dropped significantly, and due to Different L2 mechanisms have different degrees of DA cost reduction, ranging from about 50% to 99% cost reduction.

1.3.2 Verification cost

is mainly used by ZK Rollup to verify the reliability of Rollups transactions through ZK means.

1.3.3 Other costs

mainly include off-chain engineering and operation and maintenance costs. Due to the current way of operating Rollups, the operating cost of the node is close to the cloud server cost, which is relatively small (close to the enterprise AWS server cost)

1.4 Comparison of L2 profit and other L1 data

At this point, we have a rough understanding of Rollup L2 The overall income-expenditure structure can be compared with Alt L1. Here Rollups chose Arbitrum, Base, zkSync, and Stakrnet weekly average data as the data source.

Source: Dune Analytic, Growthepie

It can be seen that the overall profit margin of Rollups is relatively close to Solana, and has obvious advantages over BSC, reflecting the excellent performance of Rollups' business model in terms of profitability and cost management. .

2. Horizontal comparison of Rollups

2.1 Overview

The fundamental performance of Rollups varies significantly at different stages of development. For example, when there is an expectation of currency issuance in a transaction, Rollups will experience a significant increase in transaction volume, and the subsequent fee income and expenses will also increase significantly.

Source: IOSG Ventures

Most Rollups are still in their early stages, and absolute profitability is not that important to them, but more about ensuring breakeven and ensuring long-term development. This is also the concept that Starknet has always announced that it hopes to achieve profit by not charging additional fees to users.

But since mid-March, Starknet has been operating in a state of negative income and continues to this day. Its on-chain activity performance is indeed poor, but what is the root cause of negative income, and will it continue in the long term?

Let’s go deeper with this question. In fact, the revenue structure of Rollups is relatively similar, but the marginal cost structure brought about by the Rollup mechanism of each chain is different, and different calculation mechanisms such as data compression methods also bring about cost differences.

Source: IOSG Ventures

We hope to conduct a cost comparison among Rollups to help us compare the features of different Rollups horizontally.

2.2 The cost structure of different types of L2 ZK Rollup

ZK Rollups mainly differ in the verification cost. The verification cost can often be regarded as its fixed cost, which is difficult to collect through shared handling fees. This is also the root cause of Rollups' inability to make ends meet.

Source: David Barreto@Starknet, Quarkslab, Eli Barabieri, IOSGVentures

This article mainly discusses two relatively mature ZK Rollups with trading volume.

Starknet

Starknet uses SHARP, a shared verification service. After transactions are sorted, confirmed, and blocks are generated, batches are constructed through SHARP to construct transaction proofs, which are sent to the L1 contract for verification. After passing, the proofs are sent to the Core contract.

The fixed costs of verification and DA in Starknet come from blocks and batches respectively.

Source: Starknet community - Starknet Costs and Fees

The variable costs in Starknet increase with the increase in the number of transactions, mainly DA costs, which theoretically will not incur additional expenses. It's actually even the opposite - Starknet's transaction fees are charged per write, but its DA cost only depends on the number of memory cells updated, not the number of updates per cell. As a result, Starknet has previously charged exorbitant DA fees.

There is a time difference between the collection of transaction fees and the payment of operating costs, which may result in partial losses or profits.

因此我們看到，只要有交易還在產生，Starknet就需要不斷出塊並支付區塊和批次的固定成本。同時，交易數量越多，需要支付的變動成本就越多。固定成本並不會顯著增加邊際成本

Source: Eli Barabieri - Starknet User Operation Compression

Starknet由於對每個區塊有計算資源的限制（Cairo Steps），其gas fee計算方法是根據計算資源和資料量大小，分別涵蓋固定成本和變動成本。由於出塊/批次的成本難以分攤到每個交易，但由於每個區塊是到達了一定計算資源後才關閉（固定成本被觸發），因此可以透過計算資源的維度來計算並收取一部分的固定成本。

但同時由於出塊時間的限制，如果交易量不足（單一區塊中的計算量不足），計算資源並不能很好的衡量所需要攤掉的價格，因此固定成本仍然無法被完全覆蓋。同時「運算資源的限制」會受到Starknet網路參數升級的影響，EIP4844後短期營運的大幅虧損便體現了這一點，虧損直到收取的費用裡的運算資源參數被調整後才有所緩和。

Source: Growthepie

Starknet的收費模式並不能在每一筆交易中有效地填補固定成本，因此當Starknet主網更新及交易量極低時，就會出現負收入的情況。

zkSync (zkSync Era)

zkSync era在Boojum升級後從區塊驗證轉向了批次驗證和儲存狀態差異，有效降低了驗證和DA成本。流程基本上類似Starknet，Sequencer提交批次到Executor合約（狀態差異和DA承諾），證明節點提交驗證（ ZK 證明和DA 承諾），驗證通過後執行批次（每45個批次執行一次）；區別在於Starknet對於區塊和批次都有驗證成本而zkSync僅有批次的驗證成本。

zkSync和Starknet的成本對比

Starknet批次大小比 zkSync Era 大得多，zkSync Era 每批的交易限制為 750 或 1,000，而 Starknet 沒有交易限制。

Source:IOSG Ventures

這樣看來，Starknet的scale能力更強，由於每個區塊都有計算資源限制，單塊中處理更多交易和批次的能力使其在高頻交易和需要處理大量簡單操作的場景中表現更好，但在交易量較小的時候會出現固定成本過高的問題。 zkSync的壓縮效率和靈活的塊資源使其在需要靈活應對L1 gas價格波動和自身鏈上活躍度匱乏的情況下更具優勢，但在出塊速度方面會有限制。

對使用者來說，Starknet的收費模式會更用戶友好，與L1相關性較小，規模效應更強。 zksync的費用更有效率但隨L1波動會更大。

對於協議來說，在活躍度低的階段，Starknet高昂的固定成本會帶來更多的虧損，而zkSync會更適用於這種場景。在活躍度高的階段，Starknet更適用於進行大量高頻交易並控製成本，zkSync目前的機制在高交易量上表現可能會略遜一籌。

2.3Optimistic rollup

Optimistic Rollup的成本結構相對簡單，在沒有驗證成本的情況下，用戶僅需要支付L2的計算成本和發佈到L1數據的DA成本，其中狀態根的發布由於和出塊相關，更偏固定成本，而壓縮交易的上傳為易於預估易於分攤的變動成本。

和Zk Rollup相比，其固定成本更低，更適合交易量適當的場景，但由於每筆交易需要包含簽名，導致DA即可變成本會更高，在大規模採用階段邊際成本帶來的優勢也就相對更小。

Source:IOSG Ventures

基於目前的採用規模，ZK Rollup的固定成本可能會導致無補貼交易更高的費用下限，相較OP Rollups為用戶帶來成本，但ZK的優勢明顯在於規模化：

高交易量和證明聚合將驗證成本分攤，最終L1節省的邊際成本將超過Optimism Rollups；運行Validiums/Volitions和僅需狀態差異的DA、更快的提款速度等會更適合規模型的經濟需求和RaaS生態。

2.3 數據對比

收入

Rollups向用戶收取的gas fee，可以看到Base收入較高，Starknet收入較低，Arbitrum和zkSync持平，交易量的差異導致了橫向和縱向的差距，因此我們計算每交易收入。會發現在EIP4844升級前，Arbitrum的每筆交易收入較高，升級後Base的每交易收入較高。

Source:IOSG Ventures

成本

從每筆交易的成本來看，Base在EIP4844前，由於DA成本過高，導致交易成本過高，實際上處於邊際成本較高的情況，由於規模經濟導致的成本優勢並沒有反映出來。而在EIP4844後，隨著DA成本的大幅降低，Base的每單交易成本直線下降，目前是所有Rollup裡交易成本最低的。 OP和ZK相比，可以看到OP Rollups是升級更大的受惠者，StarkNet 的 L1 DA 的實際成本可以降低約 4 到 10 倍，略小於OP Rollups一個數量級。這也與理論推論一致：在 EIP-4844 升級中，ZK Rollups 的收益不如 OP Rollups 大。 ZK Rollup在升級後的費用表現也反映了固定成本對其的影響。

Source:IOSG Ventures

利潤

資料來看，Base由於規模效應毛利最高，遠超同為Optimistic的Arbitrum。同為ZK Rollup的Starknet由於交易量過低，無法覆蓋固定成本導致交易毛利為負，zkSync則為正但同樣受限於固定成本，低於OP Rollup。 EIP4844的升級並沒有為利潤率帶來直接的幫助——受惠的主要將是用戶，其費用成本大幅降低。

Source:IOSG Ventures

3. 總結

3.1 成本側

目前看來大部分Rollups還處於其Margin curve的成本側

目前看來大部分Rollups漸層同時平均固定成本也會顯著降低。但未來以太坊L1或L2生態交易量興起後，受網路的容量影響平均交易成本的上升會導致邊際成本逐漸呈上升趨勢（從Base3-5月的表現可見），這是Rollup長期發展不可忽視的問題。在關注短期採用所導致的成本變化時，我們也需要關注Rollups在長期成本曲線上所做的努力。

Source: Wikipedia - Cost curve

而短期看來，對於Rollups來說，更有效地減少邊際成本是最好建立壁壘的方法，其中針對市場狀況調整收入和成本模式是比較好的解決方案。

3.2 收入側

為了保持長期的競爭力，協議盡可能不對用戶額外收費，甚至倒貼費用讓用戶支出盡量保持低且穩定，如我們看到Starknet現在的情況。優先費用固然會帶來更多收入，可前提是鏈要有足夠的活躍度。

在EIP4844後，部分Rollups的收入產生了大幅下降（如Arbitrum），這是由於一部分利潤差來源——DA數據費用部分的隱性收入已經幾乎被抹除。 Rollups的收入模式將會變得相對單一，主要從L2費用當中挖掘，隨著交易量的增長，產生的優先費用和擁堵費用會是重要的收入組成部分。同時在主動收入方面，透過Sequencer提取MEV也將是未來Rollups重要的收入來源之一。

The above is the detailed content of Is Rollup currency overvalued or undervalued? The future of Rollups. For more information, please follow other related articles on the PHP Chinese website!