Following the recent Dencun upgrade, Ethereum's network is facing increased strain as the demand for blob transactions surges. The upgrade was aimed at reducing the cost of Layer 2 transactions by replacing the traditional "calldata" method with blob transactions, which has proven successful in making transactions more affordable for end users. This change has enabled Layer 2 solutions like Arbitrum, Optimism, Base, and Linea to utilize blobs for transaction posting.

Reports indicate that the rate of blob transactions on Ethereum has exceeded the network's set capacity, showing the immediate impact of the Dencun upgrade. The addition of inscriptions on blobs, inspired by Bitcoin Ordinals, allows users to embed unique fungible and non-fungible artifacts within transactions.

Even though blobs are ephemeral and removed from the network after 18 days, full archival nodes can retain this data indefinitely. A recent analysis from Dune Analytics shows that 40% of blob transactions are now related to inscriptions, demonstrating a high utilization rate, especially among Ethereum's various Layer 2 solutions.

The network is currently experiencing a blob contention, with blobs operating at a 100% utilization rate. Additionally, there is a significant backlog in the mempool, with 160 blobs awaiting processing. Given Ethereum's capacity to include only up to six blobs per block, the backlog is approximately 40 times higher than what the network can handle in a single block.