Rollups are one of the most promising scaling solutions for Ethereum, offering faster transactions and significantly lower fees. But beyond performance, a critical question emerges: Are rollups sustainable businesses? Can they generate revenue and capture long-term value?
This article explores the economic foundations of rollups—how they monetize their infrastructure, manage costs, and position themselves in a competitive ecosystem. We’ll examine transaction fees, MEV (Maximal Extractable Value), decentralized sequencing, and emerging models like shared sequencers and prover markets.
The Economics of Rollup Transaction Fees
At their core, rollups reduce user costs by batching transactions off-chain and posting compressed data to Ethereum Layer 1 (L1). However, these savings don’t come free for operators. Every rollup must cover two primary cost components: execution cost and security cost.
Execution Cost: The Gas Model Inherited from Ethereum
Execution cost refers to the computational resources required to process transactions—running smart contracts, updating state, and storing data. Just like on Ethereum, rollups use a gas-based model to meter these operations.
While most rollups aim for EVM equivalence, subtle differences affect gas pricing. For example, zkSync Era supports native account abstraction, which can increase gas usage for certain wallet operations compared to externally owned accounts (EOAs). Still, the fundamental mechanism remains consistent with Ethereum’s design.
Two additional factors influence transaction fee dynamics:
- Congestion Fees: During high-traffic periods—such as Arbitrum Odyssey—network demand spikes cause gas prices to rise.
- Minimum Transaction Fees: To prevent spam and denial-of-service attacks, rollups set floor prices. Arbitrum One enforces 0.1 gwei, Nova uses 0.01 gwei, and Optimism sets it at 0.001 gwei. These thresholds balance accessibility with network security.
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Security Cost: The Hidden Expense of Data Availability (DA)
The dominant cost for most rollups is data availability (DA)—posting transaction data to Ethereum L1 so anyone can reconstruct the rollup’s state. This ensures trustlessness and inherits Ethereum’s security.
In May alone, Arbitrum submitted ~3,927 MB of data to Ethereum and paid 4,856 ETH—approximately 1.24 ETH per MB. At current prices, this makes Ethereum’s DA layer roughly 100 million times more expensive than AWS S3 storage.
To mitigate this, rollups employ aggressive compression techniques:
- Arbitrum and Optimism (Bedrock) use Brotli and zlib compression.
- StarkNet and zkSync Era publish only state diffs—changes between states—rather than full data sets.
Looking ahead, EIP-4844 (Proto-Danksharding) will introduce blob transactions, drastically reducing DA costs. This upgrade is expected to lower fees by up to 90%, accelerating mass adoption.
Meanwhile, alternative DA layers like Celestia, EigenDA, and DACs offer trade-offs between decentralization and cost. High-value DeFi apps may prefer Ethereum’s security, while games or social networks might opt for cheaper alternatives.
Decentralized Sequencers: The Path to Trustless Scaling
Today, major rollups like Arbitrum, Optimism, and zkSync rely on centralized sequencers—single entities that order transactions and submit batches. While efficient during early development, centralization introduces risks:
- Transaction Censorship: Operators could delay or block specific transactions.
- Single Point of Failure: Downtime in the sequencer halts the entire network.
To address this, projects are moving toward decentralized sequencers (DS)—a process similar to Ethereum’s transition to Proposer-Builder Separation (PBS).
Approaches to Decentralized Sequencing
- Leader Election Mechanisms:
Using PoS voting, auctions, or DPoS systems to rotate sequencer roles. - Open Block Building Markets:
Inspired by MEV-Boost, allowing multiple builders to compete for inclusion rights. - First-Come-First-Served (FCFS):
Used by Arbitrum today; variants like Time-Boost allow users to pay for slight priority (up to 0.5 seconds).
Teams can either build DS internally or outsource it via services like:
- Espresso Systems / Astria
- Flashbots’ SUAVE (a cross-domain private mempool)
- Based Rollups, where Ethereum L1 proposers directly include rollup blocks
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MEV in Rollups: A New Frontier for Revenue
Once decentralized sequencers are live, MEV becomes a core monetization vector.
Intradomain MEV
This mirrors Ethereum L1 MEV: arbitrage opportunities across DEXs, liquidations, sandwich attacks. With open block markets, searchers will deploy bots within rollups just as they do on mainnet.
Cross-Domain MEV
More complex—and potentially more valuable—is cross-rollup MEV. For instance:
- Buying an asset cheaply on Rollup A before a price update propagates from L1.
- Executing arbitrage across multiple chains simultaneously.
However, cross-domain strategies face execution risk due to differing finality times. Projects like Primev are building communication layers to provide pre-confirmations across domains, enabling safer MEV strategies.
Shared Sequencers (SS): Unlocking Atomic Cross-Rollup MEV
When multiple rollups share a sequencer, new possibilities emerge:
- Atomic bundle execution: A searcher can submit a bundle requiring two transactions—one on Rollup A and one on Rollup B—to execute together or not at all.
- Value from "junk" data: Information useless in isolation may become valuable when combined across domains.
While full atomicity enhances efficiency, shared sequencers raise business model questions:
- Who captures the MEV?
- How should revenue be redistributed among participating rollups?
Fuel Network proposes tokenizing the right to earn fees from blockspace—a way to capture value without burdening users with new tokens.
Monetizing Proof Systems: Prover Networks & Markets
For ZK-rollups, generating validity proofs is computationally intensive. Two models have emerged:
Prover Networks (e.g., Scroll)
Rollup-specific networks where provers (called "Rollers") stake tokens to participate. Sequencers assign proof tasks randomly based on reputation. Penalties apply for late or invalid proofs.
A key innovation: rewarding all provers who complete proofs within a time window—not just the fastest—prevents winner-takes-all dynamics and encourages parallel processing.
Prover Markets (e.g., =nil;)
Open markets where any application can request proofs. Developers post jobs with parameters like circuit type, timeout, and budget. Provers compete to fulfill them.
These markets support diverse ZK applications beyond rollups—identity verification, AI inference, gaming—and create new revenue streams for hardware providers.
Final Thoughts: The Future of Rollup Monetization
- Transaction fees will keep falling, thanks to EIP-4844 and alternative DA solutions. Low fees benefit users but limit direct revenue potential.
- MEV is the next growth frontier. As rollups decentralize sequencing, capturing intradomain and cross-domain MEV will become essential for sustainability.
- Design choices matter: Internal vs outsourced sequencing/proving affects capital efficiency, developer control, and value accrual.
- Shared sequencers could unlock powerful network effects—but only if MEV redistribution mechanisms are fair and transparent.
Ultimately, the most successful rollups won’t just scale Ethereum—they’ll build resilient economic models that align incentives across users, operators, and developers.
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Frequently Asked Questions (FAQ)
Q: Why are rollup transaction fees so low compared to Ethereum?
A: Rollups batch thousands of transactions off-chain and post only compressed data to Ethereum L1. This reduces execution overhead and leverages cheaper storage patterns.
Q: What is the biggest cost for rollup operators?
A: Data availability (DA) on Ethereum L1 accounts for over 80% of total costs. Projects use compression and await EIP-4844 to further reduce expenses.
Q: Can rollups make money if transaction fees are near zero?
A: Yes—through MEV extraction, prover markets, shared sequencing revenue sharing, and tokenized blockspace rights. Fee income is just one part of the model.
Q: What’s the difference between a prover network and a prover market?
A: A prover network serves a single rollup (like Scroll), while a prover market (like =nil;) is open to multiple ZK applications, creating a shared infrastructure layer.
Q: Will all rollups eventually decentralize their sequencers?
A: Most major rollups plan to do so within 2–3 years. Early-stage or app-specific rollups may outsource sequencing via shared services instead of building in-house.
Q: How does shared sequencing affect MEV capture?
A: It enables atomic cross-rollup MEV opportunities but requires revenue-sharing mechanisms so individual rollups aren’t disincentivized from joining.