The development of blockchain technology over the past decade has shifted from testing primitive protocols to building a complex digital economy, where blockchain has emerged as a core commodity. According to analysis from the Tan Phat Digital team, blockspace is essentially the limited amount of data available in each block of the blockchain, used to execute source code, store transaction status, or record digital artifacts. When demand for this resource exceeds the network's fixed supply capacity, a state of scarcity is established, triggering a chain of economic reactions that profoundly impact the value of the native tokens. This report analyzes the micro and macro mechanisms through which blockchain scarcity reshapes digital asset valuations, from direct buying pressure to long-term value accumulation models and network security.
The economic nature of Blockspace as a computing commodity
Blockspace is more than just computer memory; it represents a globally negotiated “special computing commodity.” Unlike traditional resources, blockchain is the only infrastructure that allows solving the problem of duplicating value on the internet without going through a centralized intermediary. In the blockchain economy, blockspace producers are decentralized networks of validators or miners, while consumers are anyone who wants to make transactions, from individual users to complex smart contracts.
Blockspace's economic model is based on the formula Price x Volume = Quantity, where gas fees act as a signal of demand. Unlike traditional cloud computing models like AWS, where businesses pay infrastructure costs to serve customers, in blockchain, end users directly pay implementation costs. This creates a real-time auction market where each unit of data or computation (gas) is assigned a price at the time of execution.
Compare the resource structure and limitations of the main networks
Below are detailed economic characteristics of the leading networks compiled by Tan Phat Digital Compatible:
Bitcoin:
Resource unit: Block size (Bytes/Weight).
Supply limit: Average 1 MB.
Allocation mechanism: First price auction.
Nature of resource Product:Digital Gold.
Ethereum (L1):
Resource Unit: Gas Limit (Compute/Storage).
Supply Limit: 30 million gas per block.
Allocation Mechanism: EIP-1559 (Base + Priority).
Asset Nature:Digital Oil/Infrastructure.
Solana:
Resource Unit: Compute Unit (CU).
Supply Limit: Theoretical 48 million CU per block.
Allocation mechanism: Local fee market.
Nature of asset: High performance computing.
Blockspace scarcity stems from the need to maintain decentralization. If block sizes increase excessively, node operating costs will increase, leading to centralization risks. Therefore, networks intentionally maintain a limited supply, creating value for that space when demand for the network increases.
See more: Blockspace is What
The mechanism of direct impact of Blockspace scarcity on Token prices
Blockspace scarcity impacts token prices through three main channels: buying pressure for payment, supply reduction mechanism and network revenue increase.
Increased transaction fees and direct buying pressure
When demand exceeds the block's processing capacity, users must compete by paying additional priority fees so that transactions are processed faster. Since transaction fees must be paid in the network's native tokens (e.g. ETH on Ethereum, SOL on Solana), the increase in fees directly creates demand for token purchases.
A prime example is Yuga Labs' "Otherside" NFT minting event in May 2022. Extreme demand for 55,000 virtual lots caused gas fees on Ethereum to skyrocket to 6,000 - 8,000 gwei. In less than 24 hours, users spent a total of more than 225 million USD on gas fees. To carry out these transactions, large amounts of ETH were purchased from the market, creating immediate upward pressure on the price. Even if the value of an NFT is only a few hundred USD, users are still willing to pay thousands of USD in gas fees to secure a position in the block, reflecting the time and opportunity value of the blockspace.
Fee Burning Mechanism and Impact on Circulating Supply
In modern models such as Ethereum post-London upgrade (EIP-1559), a large portion of transaction fees (base fees) are burned forever instead of paid to miners. When blockchain space is scarce, base fees increase, leading to increased token burns. If the amount of tokens burned exceeds new issuance through block rewards, the network will become deflated.
Rate of Supply Reduction - Scarcity x Transaction Demand
Data shows that during peak activity periods in 2024, the EIP-1559 mechanism helped burn millions of ETH, directly supporting asset valuations by reducing circulating supply. However, this dependence also creates risks: if on-chain activity declines (as in a bear market), the burn rate will slow, and the token could return to inflation, weakening the investment thesis for "ultra sound money".
Increased Staking Revenue and Yields
Scarcity increases the network's total fee revenue, most of which goes to validators (in a Proof of Stake). Higher revenue increases staking yield (APR), attracting more investors to buy and lock tokens to receive profits. By November 2025, Ethereum's staking participation rate had increased to 28%, or 33.6 million ETH, creating a significant supply barrier on exchanges.
See more: What is gas fee
Blockspace Cycles: Correlation with Business Cycles and Asset Allocation
Blockspace markets move in predictable cycles, similar to traditional business cycles, including expansion phase, peak, recession, and trough.
Fee inflation and expansion phase
During this phase, the birth of new applications (like DeFi summer or the NFT craze) creates explosive demand. User growth leads to more efficient use of network resources initially, but scarcity eventually drives up prices. The increased wealth of users in the bull market makes them less sensitive to fee prices, leading to exponential increases in gas fees. During this phase, high-beta assets (application tokens) often outperform Layer 1 tokens.
Depression and return to abundance phase
As demand falls and asset prices decline, blockchain becomes abundant. For example, the average gas fee on Ethereum dropped from 128 gwei (January 2022) to 22 gwei just a few months later. When fees are low, the pressure to buy tokens to pay for gas and the supply burning rate both decrease sharply. In this environment, Layer 1 tokens (such as ETH, BNB, SOL) often act as defensive assets, holding their value better than application tokens due to their fundamental role in the network infrastructure.
Risk-Return Performance Analysis (Sharpe Ratio)
Based on 2024 data, Tan Phat Digital records the performance of key assets such as following:
Bitcoin: Annual volatility 51.36%, average Sharpe ratio 0.017%. Characteristics: Most stable, leading the market.
Ethereum: Annual volatility 66.24%, average Sharpe ratio 0.020%. Characteristics: Balance between growth and safety.
Solana: Annual volatility 99.18%, average Sharpe ratio 0.031%. Characteristics: High volatility, explosive growth.
Data shows that Solana has the highest Sharpe ratio in the 2023-2024 recovery period, reflecting its ability to capture value from the rapid increase in high-performance blockchain demand.
Bitcoin and the long-term security budget problem
Bitcoin represents a unique blockspace economic model where scarcity rarity is hard-programmed through the halving mechanism (halving the block reward).
From block rewards to transaction fees
Bitcoin's security budget currently relies heavily on block rewards. However, when this reward goes to zero in 2140, the network must rely entirely on transaction fees to maintain hashing power. If Bitcoin's blockchain is not scarce enough or valuable enough to generate high fee revenue, the cost of conducting a 51% attack will drop, directly threatening BTC's valuation as a secure store of value.
Impact of Ordinals and BRC-20
The introduction of the Ordinals and Inscriptions protocols in 2023 changed this dynamic by allowing data storage arbitrary directly on the Bitcoin blockchain. This created the longest peak blockspace usage in Bitcoin history.
Fee Revenue: Fees related to Ordinals at one point accounted for 15.45% of Bitcoin's total transaction fees.
Price Forecasting: Studies using the TemporalFusionTransformer model have demonstrated that Ordinals data is an essential feature for accurately forecast BTC prices and transaction fee rates.
Improved security:Increased blockchain demand through these new applications has helped offset the decline in block rewards after the 2024 halving, bolstering the network's security budget.
However, excessive scarcity has also sparked debate about "polluting" the network and pushing regular transaction fees to zero accessible to individual users.
Ethereum: Shift from scarcity to data availability (DA)
Ethereum is making a historic shift through a rollup-focused roadmap and the Dencun upgrade (March 2024).
EIP-4844 and the "Blob" era
Before Dencun, Layer 2 (L2) must compete directly with Layer 1 users for block space through "calldata", which is very expensive. The EIP-4844 upgrade introduces rollups-specific "blobs" with a completely separate fee market.
Cost reduction: Transaction fees on L2s like Arbitrum and Optimism were reduced by 90-95% immediately after the upgrade.
Effect on ETH: The introduction of abundant blob space has significantly reduced the amount of base fees being charged. burning on Mainnet. As a result, the deflationary nature of ETH has weakened in 2024-2025, shifting value from "supply scarcity" to "infrastructure dominance".
New Cumulative Value: Instead of relying on token burning, ETH's value is now driven by the need for data availability and its role as the ultimate payment layer upper.
The Future of Blockspace Pricing on Ethereum (2025-2026)
Forecast indicators for November 2025 include:
ETH Price: Forecasted to reach 4,850 USD with a steady growth trend.
Market Capitalization: Estimated 580 billion USD.
Activity on L2: Accounts for 92% of the total ecosystem, showing a complete shift to L2.
L2/L1 transaction ratio: Reaching 10x, Layer 1 officially becomes the wholesale payment layer.
In October 2025, blob fees on Ethereum recorded a record high of over 42,000 gwei due to extremely high demand from rollups, showing that scarcity could still reappear as the ecosystem expands.
Solana: Abundant Blockspace Model and Local Fee Market (LFM)
In contrast to Ethereum, Solana focuses on providing an extremely abundant blockspace supply through parallel processing architecture and Proof of History (PoH).
Local Fee Markets
Solana solves the problem of network congestion with LFM, allowing fees to only increase for transactions interacting with the same piece of state (e.g. the same NFT mint) without affecting the entire network. Other transactions such as simple money transfers keep fees low under 0.001 USD even when there is local congestion.
This model creates SOL demand through extremely large transaction volumes. The stability of gas fees encourages high-frequency applications such as micropayments and gaming. Scarcity on Solana lies not in overall block space but in preferential access to high-demand states.
Financializing Blockspace: Derivatives Markets and Risk Governance
The volatility of gas fees led to the birth of Ethereum Blockspace Futures. This is an important step forward in treating blockchain as a hedged digital commodity.
The launch of blockchain futures allows organizations to lock in fixed gas costs for financial planning. Miners and Validators can also ensure stable revenue by pre-selling block space. By 2025, the blockchain derivatives market is expected to reach a monthly trading volume of $200-300 million.
The risks and downsides of excessive scarcity
While scarcity initially drives token prices, if left unchecked, it can have negative consequences. Excessive transaction fees discourage new users and push developers to cheaper rival networks. In addition, the tendency to centralize power in large validators to solve costs also weakens the core principle of blockchain.
Typical Case Study on Blockspace and Token Valuation
Below are real-life examples analyzed by Tan Phat Digital to clarify the correlation between blockspace and asset value:
1. Yuga Labs "Otherside" NFT minting event (Ethereum)
In May 2022, Yuga Labs opened the sale of 55,000 Otherdeeds. The huge demand caused gas costs to skyrocket to 8,000 gwei. In just 3 hours, users spent 174 million USD on gas fees, equivalent to 1 million USD per minute. To make a transaction, users are forced to buy a large amount of ETH, creating extremely strong direct buying pressure on the original token even though the NFT value is sometimes lower than the gas fee.
2. The explosion of Bitcoin Ordinals and BRC-20
The birth of Ordinals (January 2023) transformed the Bitcoin blockchain from containing only financial data to containing arbitrary data. Fees from Ordinals sometimes accounted for 15.45% of total Bitcoin transaction fees. This increases miner revenue and strengthens the value of BTC in the context of block rewards decreasing post-halving.
3. Jupiter's JUP airdrop on Solana
In January 2024, the JUP token airdrop to nearly 1 million wallets created a traffic pressure of 90,000 requests per second (RPS). Thanks to its parallel processing architecture and preemptive fees, the Solana network maintains a block generation time of 400ms. This event pushed the SOL price up 4.6% immediately due to a sudden increase in network demand.
4. Dencun upgrade and fee shift to Layer 2
The Dencun upgrade (March 2024) introduces "Blob space", which reduces transaction fees on Layer 2 (such as Arbitrum, Optimism) by 90-95%. This causes Ethereum Mainnet to lose a large portion of its burning fees, weakening the "Ultra Sound Money" thesis in the short term but promoting the explosion of the Layer 2 ecosystem.
5. Fusaka Upgrade (December 2025)
The Fusaka upgrade fixed near-zero blob prices by setting a minimum floor fee (EIP-7918). This is estimated to help Ethereum increase the amount of ETH burned by 8 times, contributing 30-50% to the total burn by 2026, helping to stabilize the value of ETH through capturing value from Layer 2.
6. The Birth of ApeChain for the ApeCoin Ecosystem
After Otherside's gas fee disaster, Yuga Labs built ApeChain (a Layer 3 on Arbitrum) using APE tokens as gas fees. Moving blockspace demand from Ethereum to a private chain directly increases the utility of the APE token, transforming it from a purely governance token into a necessary "fuel" for the entire gaming and NFT ecosystem.
7. Solana's Local Fee Market (LFM)
In November 2024, Solana data showed that the average fee for uncontested transactions reached 0.0003 SOL, while the average fee for "hotspot" transactions was 35 times higher. This case study demonstrates that Solana can isolate blockchain scarcity at the application level, protecting regular users from gas price fluctuations while still capturing great value from MEV and arbitrage operations.
8. DeFi Kingdoms and Migration to Avalanche Subnets
To avoid high gas fees and congestion on Harmony, DeFi Kingdoms has migrated to a separate "Subnet" on Avalanche. Owning a custom blockchain helps the project control transaction fees, improve user experience, and directly support the value of the AVAX token through a secure staking mechanism for subnets.
9. Bitcoin Security Budget 2026
In early 2026, the proportion of transaction fees in total Bitcoin miner revenue reached 15%. This case study shows that as blockspace becomes more scarce due to L2 applications like BitVM or Babylon, transaction fees are gradually replacing block rewards to protect the network, helping maintain trust in the security of BTC as the reward drops to 3,125 BTC.
10. AI Agents and stable blockchain demand (2026 Forecast)
AI entities (AI Agents) are expected to dominate on-chain transactions in 2026. They require fee stability to calculate return on investment (ROI) before performing tasks. The fact that networks like Vanar or Solana keep fees within a narrow range attracts these AI Agents, creating a sustainable and predictable source of blockspace demand for the native token.
Frequently Asked Questions (FAQ)
What is Blockspace? Blockspace is the finite amount of data available in each block of the blockchain, used to store transactions and execute source code.
Why is blockchain scarce? Scarcity is intentionally established to maintain decentralization; If the block is too large, the cost of running the node will skyrocket, leading to centralization.
How does blockchain scarcity affect native token prices? High demand for finite space forces users to purchase native tokens to pay priority fees, creating direct buying pressure and increasing revenue for validators.
What is a blockspace cycle? It is a fluctuating pattern of blockspace supply and demand, similar to a business cycle, where user growth leads to fee inflation and then a downturn.
How do fee burning mechanisms (like EIP-1559) impact token supply? When the base fee increases due to blockchain scarcity, a large amount of tokens are permanently removed from circulation, potentially causing the token to become deflationary.
What is a "Blob" in Ethereum? A Blob is a new type of temporary data space introduced with the Dencun upgrade, dedicated to Layer 2s to reduce the cost of storing data on Layer 1.
What does Ethereum's Fusaka upgrade change in terms of transaction fees? Fusaka introduces a minimum floor price for blobs (EIP-7918) to ensure the network captures real economic value from Layer 2 instead of letting fees fall to near zero.
Local fee market How does Solana's (LFM) work? LFM allows fees to increase only in "hotspots" (like a specific NFT mint) without increasing fees for all other users on the network.
How do Bitcoin Ordinals affect Bitcoin transaction fees? Ordinals allow data to be saved directly to Bitcoin, creating new blockspace demand and sometimes accounting for over 15% of total transaction fees of the network.
What is Bitcoin's security budget? It is the total amount paid to miners (block rewards + transaction fees) to secure the network. As block rewards gradually decrease over Halving periods, transaction fees must increase to maintain security.
Why is blockchain called "digital real estate"?Because it is a finite resource, strategically located (on the most secure chains) and its value increases according to the network effect of the community living in it.
Blockspace futures contracts (Blockspace What are Futures) used for? Helps DeFi organizations and protocols hedge the risk of fluctuating gas fees by locking in future network usage costs in advance.
Are extremely low transaction fees (like those on Solana) bad? Low fees attract users but can lead to network spam without effective local fee market or prevention mechanisms.
Does Layer 2 reduce the value of Layer 1 tokens? Although L2 reduces fees on L1, they expand the ecosystem and ultimately still require a fee (in the form of a blob or settlement) to inherit the security of L1.
What does Yuga Labs' Otherside mint event teach us about blockchain? It shows that exploding demand can cause gas fees to increase thousands of times in a matter of hours, pushing regular users off the network because they cannot compete on price.
How does AI Agent affect blockspace demand?AI agents need to execute millions of automated microtransactions, which requires an abundant supply of blockspace and extremely low fees to be economically viable.
What is PeerDAS? Is a technology in the Fusaka upgrade that helps validators check blob data faster without loading the entire block, helping increase Ethereum's scalability.
What role does game theory play in transaction fees? It ensures validators always have an economic incentive to process high-fee transactions instead of leaving blocks empty.
What is the fee-to-revenue ratio for Bitcoin miners today?In 2026, this ratio has stabilized at around 15%, showing that transaction fees are gradually becoming an important part of the security budget.
How to forecast token prices through blockchain? Investors often monitor features such as the number of Ordinals (for BTC) or monthly ETH burn volume (for Ethereum) to evaluate the health and actual value of the network.
Blockspace scarcity is the most powerful economic driver affecting the value of Layer 1 tokens. Through creating direct buying pressure to pay fees, the supply burning mechanism reduces inflation and increases revenue for the staking system, scarce blockspace directly translates network activity into market capitalization.
Tan Phat Digital believes that in the future, effective governance of blockspace scarcity will be weak. factor in determining which blockchain can dominate market share. Blockspace is no longer just a technical concept; it is the most valuable digital real estate of the 21st century, and the value of native tokens is a direct reflection of the demand for this "land".
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