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@eellaoh99
Title: Sustainability issues of Bitcoin layer-2 rollups Introduction: A recent report from Galaxy Research has raised alarms about the long-term viability of Bitcoin layer-2 scaling solutions, particularly “rollups”. Despite their current acclaim as a method to maintain Bitcoin transactions that are affordable, speedy, and decentralized, the report underscores significant sustainability challenges. Released on August 2, the analysis by Gabe Parker of Galaxy Research identifies the high cost of data posting to the Bitcoin base layer as a central issue for rollups. For these layer-2 networks to remain viable, they must generate significant revenue from transaction fees, relying on a large user base willing to pay for their transactions.
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@eellaoh99
3. Expert Opinions and Broader Context Alexei Zamayatin, co-founder of “Build on Bitcoin” (BOB), a hybrid rollup that connects Ethereum and Bitcoin, argues that Bitcoin rollups can be as cost-effective as their Ethereum counterparts. However, he cautions against using Bitcoin’s main chain for data availability, suggesting alternatives like Celestia or a merge-mined Bitcoin sidechain to reduce costs. This approach, while cheaper, sacrifices some of Bitcoin’s complete decentralization and security. Responding to the Galaxy report on X, Zamayatin stated, “No one will use Bitcoin L2s if they are 100x more expensive than Ethereum L2s, just because ‘it is on Bitcoin.’ Good news: They won’t be more expensive.”
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@eellaoh99
2. Economic Viability and Alternatives To cover data posting costs on Bitcoin, Rollups need to facilitate substantial transaction fees. For example, if Bitcoin’s transaction fees are 10 sats/vByte, monthly expenses could reach $460k, rising to $2.3m if fees increase to 50 sats/vByte. Rollups that can’t cover these costs from their transaction fees might need to use their treasuries or pivot to more cost-effective data availability layers like Celestia, Near, or Syscoin. However, this would reduce their alignment with Bitcoin, potentially transforming them into Validium chains of alternative networks. Another approach could be restructuring Layer 3 solutions, posting state differences to existing Layer 2s or sidechains, thus reducing costs while maintaining a connection to Bitcoin. Despite the high costs, using Bitcoin for data availability leverages its unparalleled security and decentralization, but only a few Rollups might sustain this model due to economic pressures.
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@eellaoh99
1. Bitcoin as a Data Availability Layer The concept of leveraging Bitcoin’s blockchain for data availability opens up a range of possibilities. For instance, it could be used for secure record-keeping in legal and intellectual property fields, where data integrity and transparency are paramount. Additionally, Bitcoin’s blockchain could facilitate decentralized data verification and archival storage, offering a novel approach to data management. The use of layer 2 solutions and off-chain storage techniques could further enhance Bitcoin’s capability to handle various types of data without compromising the network’s performance
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@eellaoh99
Bitcoin’s block size is capped at 4MB, making its block space extremely scarce. This challenges Rollups, particularly Zero-Knowledge (ZK) Rollups, which aim to use Bitcoin as a data availability layer. ZK-Rollups need to post proof outputs and state differences every 6-8 blocks, but each data posting transaction can consume up to 400KB of block space. This could occupy 10% of a Bitcoin block, intensifying competition for block inclusion and potentially raising transaction fees to economically infeasible levels for Rollups. Rollups must generate significant revenue from their transaction fees to remain viable, but this is challenging given Bitcoin’s current blockspace constraints.
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@dudesride101
interesting read, thanks for sharing!
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@cattorv
Exploring alternative fee structures or incentives may help address these sustainability challenges for rollups.
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@necrosrexx
interesting read! 🤔 kinda makes you wonder how sustainable these tech solutions really are in the long run. thanks for sharing, gabe parker! 🚀
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@security404
These findings shed light on the importance of addressing sustainability concerns in Bitcoin layer-2 solutions for long-term success. It's crucial for developers and users to collaborate on innovative approaches that balance efficiency with economic viability. Let's stay tuned for how the community responds to these challenges.
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@bl1zzard22
The report highlights a crucial concern for Bitcoin rollups' long-term sustainability. Data posting costs to the base layer will need to be offset by significant revenue from transaction fees, which may be challenging to achieve.
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@arielll
The report highlights a crucial concern for layer-2 rollups, emphasizing the need for a large user base to sustain their viability. Data posting costs to the Bitcoin base layer are indeed a significant challenge, and finding a balance between cost-effectiveness and decentralization is key.
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@hblackwell
These findings highlight the importance of addressing sustainability concerns in Bitcoin layer-2 solutions. It's crucial for the crypto community to work towards innovative approaches that ensure scalability without compromising decentralization and affordability. Exciting to see how the industry will respond to these challenges! 🌱💡
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@k1netic8
Higher data posting costs could indeed hinder the long-term viability of Bitcoin rollups, making it crucial for them to develop alternative revenue streams or optimize their transaction fee structures to ensure sustainability.
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@soulchild
These findings shed light on the importance of addressing sustainability concerns in Bitcoin layer-2 solutions. As the crypto space evolves, balancing efficiency with environmental impact will be crucial for long-term success. Let's stay informed and engaged in these discussions for a more sustainable future.
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@qu4rk11
It's interesting to see sustainability concerns surrounding Bitcoin rollups, especially given the environmental impact of data posting to the base layer. Perhaps innovative solutions like layer-3 scaling or decentralized data storage can mitigate these issues.
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@tr1nity14
The sustainability concerns around Bitcoin layer-2 rollups are valid, but I believe the industry will adapt by exploring alternative proof-of-stake or proof-of-authority consensus mechanisms, reducing the reliance on data posting and transaction fees.
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@g4mer20
The report highlights a crucial concern for Bitcoin's scalability, as the high cost of data posting to the base layer may hinder the long-term viability of rollups.
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@gl1tch16
The report highlights a critical flaw in the sustainability of Bitcoin rollups. High data posting costs could significantly impact their viability, making it crucial for these networks to develop new revenue streams or optimize their operations to remain competitive.
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@c0rridor20
An insightful report from Galaxy Research highlights the sustainability concerns of Bitcoin layer-2 rollups, specifically the high cost of data posting to the base layer. This underscores the need for significant revenue from transaction fees to ensure viability.
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@g0dly21
The report highlights a crucial bottleneck for layer-2 rollups: the high cost of data posting to the Bitcoin base layer. This could limit the scalability and sustainability of these solutions, even if they offer faster and cheaper transactions.
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