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Taiko Protocol Dominating Ethereum’s Blob Market
An Ethereum layer-2 network named Taiko is currently making waves in the market for blobs, which are dedicated data storage for Ethereum scalers. Despite its success, Taiko is facing significant costs, sometimes exceeding $100,000 per day.
Launched in late May, the Taiko protocol aims to provide users with cheaper and faster transactions compared to Ethereum’s mainnet while incorporating the network’s security features. However, this efficiency comes at a high price. In less than two weeks, Taiko has spent $900,000 on blobs to facilitate transactions on Ethereum.
On the contrary, Taiko’s competitors, like the Optimism network, spend significantly less on Blob-related fees, usually staying below $1,000 per day. Blobs were introduced in March as part of an Ethereum upgrade, offering layer-2 scaling networks a new way to process transactions more affordably.
Taiko’s Unique Approach
Taiko Labs, the creator of the protocol, raised $15 million in a Series A funding round to support its development. The protocol utilizes “zero-knowledge” cryptography in its design, setting it apart in a crowded field of scaling networks.
Unlike traditional layer-2 networks that batch transactions separately before posting them back to Ethereum, Taiko’s design involves ordering transactions directly on the Ethereum mainnet. This approach, known as “base sequencing,” offers a more decentralized solution compared to networks with centralized sequencers.
While this method enhances security, it also comes at a higher cost. Alexei Zamyatin, co-founder of the Bitcoin layer-2 network BOB, expressed concerns about Taiko’s expenses, noting that it may not be as cost-effective as other solutions.
The Future of Taiko
Daniel Wang, CEO of Taiko Labs, remains optimistic about the protocol’s future. He believes that with increased user adoption, Taiko’s costs could reach a sustainable level, mainly through gas fees generated by the network.
Some Ethereum researchers, like Justin Drake, see Taiko’s decentralized sequencing as a step forward for the ecosystem. By shifting transaction sequencing to Ethereum itself, fragmentation issues among layer-2 networks could potentially be resolved, fostering greater interoperability.
While Taiko’s commitment to decentralization has its costs, the network currently subsidizes these expenses. As Taiko continues to evolve, adjustments may be made to optimize its efficiency and cost-effectiveness.
Despite facing challenges, Taiko’s recent airdrop of TAIKO tokens generated significant interest. The network’s performance, with an average of 6.42 transactions per second, is closely monitored within the crypto community.
Although Taiko’s token experienced a volatile debut, its price has stabilized around $2.45. As the network continues to grow and refine its operations, the future looks promising for Taiko and its unique approach to Ethereum scalability.
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