Price Elasticity of Gas Demand on Ethereum and Arbitrum (opens in new tab)

Cross posting from here for visibility: Price Elasticity of Gas Demand on Ethereum and Arbitrum - Arbitrum Research We study the question of how the blockspace demand is affected by the gas fee change on Ethereum base layer and Arbitrum One rollup. This is a non-trivial question as the gas fees are themselves determined by the aggregate blockspace demand, through an EIP-1559 style mechanism, creating endogeneity. Naive approaches such as regression methods lead to incorrect conclusions. For e...