The Writing is on the Wall: Analyzing the Boom of Inscriptions and its Impact on EVM-compatible Blockchains

Despite the level of attention given to rollups there is limited empirical research about their performance. To address this gap, we conduct a comprehensive data-driven analysis of the late 2023 transaction boom that is attributed to inscriptions: a novel approach to record data onto a blockchain with no outside server needed. Inscriptions were first introduced on the Bitcoin blockchain to allow for the representation of NFTs or ERC-20-like tokens without smart contracts, but were later spread to other blockchains. This work examines the applications of inscription transactions in Ethereum and its major EVM-compatible rollups and their impact on blockchain scalability during periods of sudden transaction surges. We found that on certain days, inscription-related transactions comprised over 89% on Arbitrum, over 88% on zkSync Era, and over 53% on Ethereum. Furthermore, 99% of these transactions were related to the minting of meme coins, followed by limited trading activity. Unlike L1 blockchains, during periods of transaction surges, zkSync and Arbitrum experienced lower median gas fees, attributable to the compression of L2 transactions for a single L1 batch. Additionally, zkSync Era, a ZK rollup, demonstrated a stronger reduction in fees than optimistic rollups considered in our study: Arbitrum, Base, and Optimism.