Layer 2 solutions are crucial for enhancing Ethereum's mainnet scalability and reducing transaction costs by processing transactions off-chain before they are finalized on the main chain.

Recent data indicates a significant rise in blob usage, with daily averages reaching 21,000 since late 2024, reflecting a growing adoption of Layer 2 protocols.

This high demand for blobs has consistently met the target of three per block, leading to base fees that have sometimes exceeded $50, significantly affecting user transaction costs.

The increasing base fees, driven by high demand for blobs, are impacting decentralized exchanges (DEXs) and perpetual protocols, resulting in higher costs for users and stifling Layer 2 growth.

Blobs are a type of transaction data that do not permanently occupy mainnet space, as they are cleared after 18 days, allowing Layer 2s to bundle transactions efficiently.

Gautham Santhosh, co-founder of Polynomial.fi, warns that Ethereum Layer 2 scaling solutions may soon hit their capacity limits, potentially leading to a 'brick wall' scenario.

Currently, two Layer 2 solutions, Coinbase's BASE and World Chain, dominate the market, collectively accounting for 55% of the total daily blob activity, raising concerns about capacity limits.

The upcoming Pectra upgrade in March 2025 aims to increase the blob limit per block to nine, but Santhosh believes this will only provide a temporary solution, offering just a few months of relief.

Each block can accommodate a maximum of six blobs, and reaching the target of three triggers a base fee to manage demand from Layer 2 solutions.