Over the weekend, Ethereum layer-2 network Arbitrum (ARB) experienced a significant increase in daily transactions, reaching a new all-time high. According to data from IntoTheBlock, the network recorded a staggering 5.4 million transactions on Saturday, surpassing its previous record set in April, which stood at approximately 2.5 million transactions. The surge in transactions on Arbitrum was primarily driven by the excitement surrounding inscriptions and even resulted in a temporary network outage on Friday.
Arbitrum stands out in the Ethereum network by offering faster and more cost-effective transactions. It achieves this by utilizing optimistic rollups, which batch transactions together and settle them collectively on the main network. Unlike Ethereum, which can handle around 30 transactions per second (tps), Arbitrum can process an impressive 40,000 tps. By adopting Ordinals inscriptions, Arbitrum further enhances its token deployment capabilities, facilitating the movement of lightweight tokens and opening up additional avenues for public token issuance.
With inscriptions gaining popularity, transaction volume and network fees have surged in recent weeks. Bitcoin, for instance, has witnessed higher daily average fees compared to Ethereum, accumulating $13.9 million in fees over the past seven days. Currently, standard Bitcoin transactions cost around $10 each. The increased blockchain activity has even resulted in disruptions, exemplified by the partial network outage on Arbitrum caused by overwhelming demand for inscriptions-based transactions. Notably, over 90% of transactions processed by the network before the incident were inscription-based.
This trend is not limited to Arbitrum alone. Avalanche users paid over $13 million last week for Ordinals transactions. Additionally, the Telegram Open Network (TON) blockchain experienced severe slowing, reducing its transaction rate to just one per second due to the influx of transactions resulting from inscriptions.
Given the rising network fees, Bitcoiners are actively seeking solutions to address this issue and maintain reasonable transaction costs. While opinions on inscriptions vary among Bitcoin enthusiasts, many are exploring different strategies. For instance, Bitcoin Core developer Luke Dashjr has taken a firm stance by excluding inscriptions entirely from his new Bitcoin mining pool, OCEAN. Others are focusing on the adoption of Bitcoin layer 2 solutions, reviving older Bitcoin sidechains like Liquid, which enable faster and cheaper Bitcoin transfers.
Interestingly, the spike in fees has significantly benefited Bitcoin mining pools. These pools currently generate over one-third of their revenue solely from BTC transactions, instead of relying solely on the block’s native subsidy.
As blockchain technology continues to evolve, layer-2 solutions like Arbitrum and Ordinals inscriptions play a crucial role in enhancing scalability and reducing transaction costs. This surge in transactions reflects the growing interest and demand for more efficient and cost-effective blockchain solutions.
Moving forward, it will be interesting to observe how different networks and projects adapt to these challenges. The exploration of layer 2 solutions and alternative approaches will undoubtedly shape the future landscape of blockchain activity, driving innovation and improving user experiences across various decentralized ecosystems.