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

Krzysztof Gogol, Johnnatan Messias, Maria Ines Silva, Benjamin Livshits

TL;DR

This paper provides the first empirical analysis of the inscription boom on EVM-compatible rollups, focusing on zkSync Era during late 2023. It shows that most inscription activity came from minting meme-coins, which temporarily lowered gas costs for other users on zkSync Era due to batch processing, but it also raises security concerns around data availability with the introduction of blobs. The study leverages a large, data-driven dataset and defines a taxonomy of inscription standards while highlighting the limited utility of inscription-based tokens outside NFT marketplaces. The findings suggest that ZK rollups can absorb high inscription traffic more efficiently than L1 networks, though data retention and security questions around blob-based inscriptions warrant further investigation and cross-chain validation.

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.

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

TL;DR

This paper provides the first empirical analysis of the inscription boom on EVM-compatible rollups, focusing on zkSync Era during late 2023. It shows that most inscription activity came from minting meme-coins, which temporarily lowered gas costs for other users on zkSync Era due to batch processing, but it also raises security concerns around data availability with the introduction of blobs. The study leverages a large, data-driven dataset and defines a taxonomy of inscription standards while highlighting the limited utility of inscription-based tokens outside NFT marketplaces. The findings suggest that ZK rollups can absorb high inscription traffic more efficiently than L1 networks, though data retention and security questions around blob-based inscriptions warrant further investigation and cross-chain validation.

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.
Paper Structure (12 sections, 9 figures, 2 tables)

This paper contains 12 sections, 9 figures, 2 tables.

Table of Contents

  1. Introduction
  2. Research Questions
  3. Summary of Contributions
  4. Related work
  5. Background
  6. Inscriptions and Ordinals
  7. Operation Types
  8. Comparison with NFT and ERC-20
  9. Data collection
  10. Empricial Study of Inscriptions on zkSync Era
  11. Discussion
  12. Conclusion

Figures (9)

  • Figure 1: General Architecture of rollups -- Non-custodial L2 blockchain scaling solution
  • Figure 2: Number of inscriptions in comparison to the total number of transactions per day on zkSync Era
  • Figure 3: Percentage transactions with inscriptions in comparison to the total number of transactions per day on zkSync Era
  • Figure 4: Daily transaction count and median transaction cost paid by the user of zkSync Era.
  • Figure 5: Top 5 inscription protocols on zkSync Era
  • ...and 4 more figures