A Galaxy Research report has raised concerns about the sustainability of Bitcoin Layer-2 (L2) scaling solutions, particularly rollups.
Despite their promise of cheap, fast, and decentralized transactions, rollups face economic challenges due to Bitcoin’s limited 4MB Blockspace.
Rollups using Bitcoin for data availability (DA) layer can consume up to 10% of a block’s capacity, leading to high transaction fees and economic unsustainability.
To cover data posting costs, rollups need substantial revenue from transaction fees, which could range from $460,000 to $2.3 million per month, depending on fee rates.
Rollups may need alternative DA solutions like Celestia, Near, or Syscoin, or restructure as Layer 3 solutions to reduce costs while maintaining a connection to the Bitcoin network.
The report concludes that the future of Bitcoin rollups depends on balancing high infrastructure costs with the need to attract users and generate revenue.
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