Price Elasticity of Gas Demand on L1 and L2: Evidence from Ethereum and Arbitrum
Abstract
We estimate the causal price elasticity of gas demand on Ethereum mainnet and Arbitrum One using instrumental variable panel regression. The pooled IV elasticity is -0.006*** on Ethereum and -0.036** on Arbitrum One, indicating that both networks exhibit inelastic demand, with L2 showing greater price responsiveness than L1. Analysis reveals significant variation across resource types and wallet behaviors, with protocol wallets demonstrating near-inelasticity while high-volume operators display substantially higher sensitivity to fee changes.
Type
Publication
In ACM Conference on Advances in Financial Technologies (AFT) 2026
Authors
Senior Research Scientist
Pranay Anchuri is a Senior Research Scientist at Offchain Labs. His research spans
blockchain protocols, verifiable computation, and machine learning applied to
decentralized systems. He has published at top venues including KDD, JMLR, and ICDM,
and is an inventor on seven US patents. He holds a PhD in Computer
Science from Rensselaer Polytechnic Institute.