Ethereum’s gas model continues to evolve to improve scalability, reduce costs, and enhance network efficiency. A significant recent proposal, EIP-7706, introduced by Vitalik Buterin in May 2024, aims to further optimize gas pricing by separating calldata cost calculation and introducing a dedicated base fee mechanism similar to the one used for blob data in EIP-4844.
This update is designed to lower operational costs for Layer 2 (L2) solutions and refine how network resources are priced and consumed. Here, we break down the latest changes to Ethereum’s gas system and what they mean for users and developers.
Ethereum’s Current Gas Models: EIP-1559 and EIP-4844
Ethereum initially used a simple auction model for transaction fees, requiring users to set a gas price manually. Miners prioritized transactions with higher fees, leading to volatility, inefficiency, and user overpayment. EIP-1559, implemented in August 2021, replaced this system with a dual-fee model consisting of:
- Base Fee: A dynamically adjusted fee calculated based on previous block congestion. This fee is burned, reducing ETH supply.
- Priority Fee: An optional tip paid to miners for faster transaction inclusion.
The base fee adjustment algorithm uses the following logic:
if parent_gas_used > parent_gas_target:
current_base_fee = parent_base_fee + (parent_base_fee * (parent_gas_used - parent_gas_target) // parent_gas_target // BASE_FEE_MAX_CHANGE_DENOMINATOR
else:
current_base_fee = parent_base_fee - (parent_base_fee * (parent_gas_target - parent_gas_used) // parent_gas_target // BASE_FEE_MAX_CHANGE_DENOMINATORThis model reduces fee volatility and improves user experience by making gas prices more predictable.
However, as L2 rollups gained traction, a new challenge emerged: rollups publish large amounts of data to Ethereum for verification and data availability, often using transaction calldata. This increased competition for block space, raising costs and reducing mainnet throughput.
EIP-4844, proposed in early 2022 and implemented in 2024, introduced blob transactions—a new transaction type that carries large data packets (blobs) not processed by the EVM. Blob data is cheaper than calldata and has its own gas market with a separate base fee mechanism:
base_fee_per_blob_gas = MIN_BASE_FEE_PER_BLOB_GAS * e^(excess_blob_gas / BLOB_BASE_FEE_UPDATE_FRACTION)This exponential function adjusts fees based on demand, keeping blob storage affordable while preventing spam. Each block currently targets 3 blobs (0.375 MB) and allows up to 6 blobs (0.75 MB).
Refining Execution Gas with EIP-7706
EIP-7706 extends Ethereum’s gas model by introducing a dedicated fee market for calldata. Similar to EIP-4844, it uses an exponential pricing model to decouple calldata costs from execution gas, reducing fees for data-heavy operations like L2 batch submissions.
A key innovation is the LIMIT_TARGET_RATIOS vector, set to [2, 2, 4], which defines target ratios for:
- Execution gas
- Blob gas
- Calldata gas
The calldata gas limit is derived from the execution gas limit. Currently, with an execution gas limit (gas_limits[0]) of 30 million and a CALLDATA_GAS_LIMIT_RATIO of 4, the calldata gas target is:
calldata_gas_target = gas_limits[0] // CALLDATA_GAS_LIMIT_RATIO // LIMIT_TARGET_RATIOS[2] = 30,000,000 // 4 // 4 = 1,875,000Assuming an average cost of 10 gas per byte (mix of zero and non-zero bytes), this supports roughly 187,500 bytes of calldata per block—double the current average usage. This approach ensures calldata remains affordable while preventing abuse.
EIP-7706’s changes are expected to significantly reduce costs for L2s and applications relying heavily on calldata, complementing the affordability already offered by blob transactions.
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Frequently Asked Questions
What is EIP-7706?
EIP-7706 is an Ethereum improvement proposal that introduces a separate base fee mechanism for calldata. It aims to reduce transaction costs for Layer 2 solutions and applications that publish large amounts of data on-chain.
How does EIP-7706 affect gas costs?
By decoupling calldata pricing from execution gas, EIP-7706 allows calldata fees to adjust independently based on demand. This can lead to lower costs for data-intensive operations and improved network efficiency.
What is the difference between EIP-4844 and EIP-7706?
EIP-4844 introduced blob transactions with a dedicated fee market for large data packets. EIP-7706 applies a similar concept to calldata, creating another independent gas market for a different type of data.
Why is calldata gas separation important?
Calldata is commonly used by L2 rollups for data availability. Separating its gas model reduces cost volatility and prevents competition with execution gas, making L2 operations more economical.
How does EIP-7706 benefit Layer 2 networks?
L2s can submit data to Ethereum at a lower and more predictable cost, reducing operational expenses and potentially lowering user transaction fees.
Will EIP-7706 change how users interact with Ethereum?
End-users may not notice direct changes, but they will benefit from lower fees and improved performance on L2 networks and dApps that rely heavily on calldata.
Ethereum’s gas mechanism continues to evolve with proposals like EIP-7706, enhancing scalability and affordability while maintaining security and decentralization. These improvements are critical for supporting the next generation of decentralized applications and scaling solutions.