# Cost Efficiency in Ethereum Optimistic Rollups

By [velenos.eth](https://paragraph.com/@velenos) · 2024-04-13

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_The article examines economies of scale in Ethereum rollups, highlighting Optimism's decreasing costs per transaction and Mb of data with higher volumes, suggesting efficiency gains. In contrast, Arbitrum shows increasing costs per transaction and Mb with higher volumes, indicating potential inefficiencies. Further research is needed for a more nuanced and comprehensive understanding._

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Economies of scale describe the phenomenon where producing more units of a product or service on a larger scale generally leads to lower average input costs per unit. This is due to the inverse relationship between the per-unit fixed cost and the quantity produced. As the quantity of output increases, the per-unit fixed cost tends to decrease, making production more cost-efficient with scale. In short, economies of scale make the product **marginally** more effective with each incremental input.

The chart describes economies and diseconomies of scale.

**In blockchains, economies of scale mean lower costs per transaction as the output (or better, the throughput, so how many transactions the blockchain can process in a given amount of time) increases**. For rollups, this efficiency could also apply to the amount of data posted to Ethereum and the cost per Mb of data posted. Chris Ahn [writes](https://www.haun.co/article/economies-of-scale):

> Unfortunately, blockchains typically exhibit diseconomies of scale, where incremental usage makes the network marginally more expensive to use. Because blockchains have competitive fee markets for blockspace, more usage drives up the cost of blockspace.

Is it really so? This short article analyses the existence of **cost-efficiency economies of scale in the two major Ethereum rollups, Arbitrum and Optimism, controlling 50% and 25% of the market share,** respectively. The analysis focuses on _producer_ economies of scale, achieved by companies or products when the average cost per unit of production decreases as the scale of operations increases, rather than _user_ economies of scale, enjoyed by end users when the cost per unit of the product or service decreases as the scale of consumption increases.

Data are extrapolated and elaborated from Dune Analytics, specifically from contributors @0xKofi and @MSilb7. The analysis covers 2023, from January 1st to December 31st.

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*Originally published on [velenos.eth](https://paragraph.com/@velenos/cost-efficiency-in-ethereum-optimistic-rollups)*