diff --git a/packages/taiko-client/internal/docker/nodes/docker-compose.yml b/packages/taiko-client/internal/docker/nodes/docker-compose.yml
index ff7f73ace51..3da01faf1c4 100644
--- a/packages/taiko-client/internal/docker/nodes/docker-compose.yml
+++ b/packages/taiko-client/internal/docker/nodes/docker-compose.yml
@@ -13,8 +13,6 @@ services:
       - "32301"
       - --host
       - "0.0.0.0"
-      - --hardfork
-      - cancun
 
   l2_geth:
     container_name: l2_geth
diff --git a/packages/taiko-client/proposer/transaction_builder/fallback.go b/packages/taiko-client/proposer/transaction_builder/fallback.go
index 120017b2067..ff4a32adf2e 100644
--- a/packages/taiko-client/proposer/transaction_builder/fallback.go
+++ b/packages/taiko-client/proposer/transaction_builder/fallback.go
@@ -10,6 +10,7 @@ import (
 	"github.com/ethereum/go-ethereum"
 	"github.com/ethereum/go-ethereum/common"
 	"github.com/ethereum/go-ethereum/log"
+	"github.com/ethereum/go-ethereum/params"
 	"golang.org/x/sync/errgroup"
 
 	"github.com/taikoxyz/taiko-mono/packages/taiko-client/internal/metrics"
@@ -184,7 +185,12 @@ func (b *TxBuilderWithFallback) estimateCandidateCost(
 	// Otherwise, we add blob fee to the cost.
 	return new(big.Int).Add(
 		feeWithoutBlob,
-		new(big.Int).Mul(new(big.Int).SetUint64(uint64(len(candidate.Blobs))), blobBaseFee),
+		new(big.Int).Mul(
+			new(big.Int).SetUint64(
+				uint64(len(candidate.Blobs)*params.BlobTxBlobGasPerBlob),
+			),
+			blobBaseFee,
+		),
 	), nil
 }
 
diff --git a/packages/taiko-client/proposer/transaction_builder/fallback_test.go b/packages/taiko-client/proposer/transaction_builder/fallback_test.go
index 8107875b6f6..cbf1fd7ed26 100644
--- a/packages/taiko-client/proposer/transaction_builder/fallback_test.go
+++ b/packages/taiko-client/proposer/transaction_builder/fallback_test.go
@@ -1,7 +1,9 @@
 package builder
 
 import (
+	"bytes"
 	"context"
+	"math/big"
 	"os"
 	"time"
 
@@ -9,6 +11,7 @@ import (
 	"github.com/ethereum/go-ethereum/common"
 	"github.com/ethereum/go-ethereum/crypto"
 	"github.com/ethereum/go-ethereum/log"
+	"github.com/ethereum/go-ethereum/params"
 
 	"github.com/taikoxyz/taiko-mono/packages/taiko-client/internal/metrics"
 	"github.com/taikoxyz/taiko-mono/packages/taiko-client/pkg/config"
@@ -17,27 +20,78 @@ import (
 )
 
 func (s *TransactionBuilderTestSuite) TestBuildCalldataOnly() {
-	builder := s.newTestBuilderWithFallback(false, false)
+	builder := s.newTestBuilderWithFallback(false, false, nil)
 	candidate, err := builder.BuildOntake(context.Background(), [][]byte{{1}, {2}})
 	s.Nil(err)
 	s.Zero(len(candidate.Blobs))
 }
 
 func (s *TransactionBuilderTestSuite) TestBuildCalldataWithBlobAllowed() {
-	builder := s.newTestBuilderWithFallback(true, false)
+	builder := s.newTestBuilderWithFallback(true, false, nil)
 	candidate, err := builder.BuildOntake(context.Background(), [][]byte{{1}, {2}})
 	s.Nil(err)
 	s.NotZero(len(candidate.Blobs))
 }
 
 func (s *TransactionBuilderTestSuite) TestBlobAllowed() {
-	builder := s.newTestBuilderWithFallback(false, false)
+	builder := s.newTestBuilderWithFallback(false, false, nil)
 	s.False(builder.BlobAllow())
-	builder = s.newTestBuilderWithFallback(true, false)
+	builder = s.newTestBuilderWithFallback(true, false, nil)
 	s.True(builder.BlobAllow())
 }
 
-func (s *TransactionBuilderTestSuite) newTestBuilderWithFallback(blobAllowed, fallback bool) *TxBuilderWithFallback {
+func (s *TransactionBuilderTestSuite) TestFallback() {
+	// By default, blob fee should be cheaper.
+	builder := s.newTestBuilderWithFallback(true, true, nil)
+	candidate, err := builder.BuildOntake(context.Background(), [][]byte{
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+	})
+	s.Nil(err)
+	s.NotZero(len(candidate.Blobs))
+
+	// Make blob base fee 1024 Gwei
+	builder = s.newTestBuilderWithFallback(true, true, func(
+		ctx context.Context,
+		backend txmgr.ETHBackend,
+	) (*big.Int, *big.Int, *big.Int, error) {
+		return common.Big1,
+			common.Big1,
+			new(big.Int).SetUint64(1024 * params.GWei),
+			nil
+	})
+
+	candidate, err = builder.BuildOntake(context.Background(), [][]byte{
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+	})
+	s.Nil(err)
+	s.Zero(len(candidate.Blobs))
+
+	// Make block base fee 1024 Gwei too
+	builder = s.newTestBuilderWithFallback(true, true, func(
+		ctx context.Context,
+		backend txmgr.ETHBackend,
+	) (*big.Int, *big.Int, *big.Int, error) {
+		return new(big.Int).SetUint64(1024 * params.GWei),
+			new(big.Int).SetUint64(1024 * params.GWei),
+			new(big.Int).SetUint64(1024 * params.GWei),
+			nil
+	})
+
+	candidate, err = builder.BuildOntake(context.Background(), [][]byte{
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+		bytes.Repeat([]byte{1}, int(rpc.BlockMaxTxListBytes)),
+	})
+	s.Nil(err)
+	s.NotZero(len(candidate.Blobs))
+}
+
+func (s *TransactionBuilderTestSuite) newTestBuilderWithFallback(
+	blobAllowed,
+	fallback bool,
+	gasPriceEstimatorFn txmgr.GasPriceEstimatorFn,
+) *TxBuilderWithFallback {
 	l1ProposerPrivKey, err := crypto.ToECDSA(common.FromHex(os.Getenv("L1_PROPOSER_PRIVATE_KEY")))
 	s.Nil(err)
 
@@ -46,27 +100,28 @@ func (s *TransactionBuilderTestSuite) newTestBuilderWithFallback(blobAllowed, fa
 
 	chainConfig := config.NewChainConfig(&protocolConfigs)
 
-	txMgr, err := txmgr.NewSimpleTxManager(
-		"tx_builder_test",
-		log.Root(),
-		&metrics.TxMgrMetrics,
-		txmgr.CLIConfig{
-			L1RPCURL:                  os.Getenv("L1_WS"),
-			NumConfirmations:          0,
-			SafeAbortNonceTooLowCount: txmgr.DefaultBatcherFlagValues.SafeAbortNonceTooLowCount,
-			PrivateKey:                common.Bytes2Hex(crypto.FromECDSA(l1ProposerPrivKey)),
-			FeeLimitMultiplier:        txmgr.DefaultBatcherFlagValues.FeeLimitMultiplier,
-			FeeLimitThresholdGwei:     txmgr.DefaultBatcherFlagValues.FeeLimitThresholdGwei,
-			MinBaseFeeGwei:            txmgr.DefaultBatcherFlagValues.MinBaseFeeGwei,
-			MinTipCapGwei:             txmgr.DefaultBatcherFlagValues.MinTipCapGwei,
-			ResubmissionTimeout:       txmgr.DefaultBatcherFlagValues.ResubmissionTimeout,
-			ReceiptQueryInterval:      1 * time.Second,
-			NetworkTimeout:            txmgr.DefaultBatcherFlagValues.NetworkTimeout,
-			TxSendTimeout:             txmgr.DefaultBatcherFlagValues.TxSendTimeout,
-			TxNotInMempoolTimeout:     txmgr.DefaultBatcherFlagValues.TxNotInMempoolTimeout,
-		},
-	)
+	cfg, err := txmgr.NewConfig(txmgr.CLIConfig{
+		L1RPCURL:                  os.Getenv("L1_WS"),
+		NumConfirmations:          0,
+		SafeAbortNonceTooLowCount: txmgr.DefaultBatcherFlagValues.SafeAbortNonceTooLowCount,
+		PrivateKey:                common.Bytes2Hex(crypto.FromECDSA(l1ProposerPrivKey)),
+		FeeLimitMultiplier:        txmgr.DefaultBatcherFlagValues.FeeLimitMultiplier,
+		FeeLimitThresholdGwei:     txmgr.DefaultBatcherFlagValues.FeeLimitThresholdGwei,
+		MinBaseFeeGwei:            txmgr.DefaultBatcherFlagValues.MinBaseFeeGwei,
+		MinTipCapGwei:             txmgr.DefaultBatcherFlagValues.MinTipCapGwei,
+		ResubmissionTimeout:       txmgr.DefaultBatcherFlagValues.ResubmissionTimeout,
+		ReceiptQueryInterval:      1 * time.Second,
+		NetworkTimeout:            txmgr.DefaultBatcherFlagValues.NetworkTimeout,
+		TxSendTimeout:             txmgr.DefaultBatcherFlagValues.TxSendTimeout,
+		TxNotInMempoolTimeout:     txmgr.DefaultBatcherFlagValues.TxNotInMempoolTimeout,
+	}, log.Root())
+	s.Nil(err)
+
+	if gasPriceEstimatorFn != nil {
+		cfg.GasPriceEstimatorFn = gasPriceEstimatorFn
+	}
 
+	txMgr, err := txmgr.NewSimpleTxManagerFromConfig("tx_builder_test", log.Root(), &metrics.TxMgrMetrics, cfg)
 	s.Nil(err)
 
 	txmgrSelector := utils.NewTxMgrSelector(txMgr, nil, nil)