Which solution will meet these requirements MOST cost-effectively?

Explanations:

Reducing the RDS DB instance size and changing the storage type to Magnetic would likely degrade performance, especially for a database handling large blobs. Magnetic storage is slower than General Purpose SSD and does not provide the necessary performance for a growing database size.

While increasing the RDS DB instance size and switching to Provisioned IOPS could improve performance, it would significantly increase costs. The additional storage capacity is not required if the primary issue is with the storage of blobs, and the use of RDS may not be the most cost-effective solution for storing large binary objects.

Storing documents in an Amazon S3 bucket offloads large binary objects from the database, which can improve performance and reduce storage costs. S3 is highly available and resilient, making it a cost-effective solution for storing large files while allowing the RDS database to focus on metadata and transactional data.

Migrating to DynamoDB could provide performance benefits but may not be the most cost-effective solution, particularly if the application is already optimized for an Oracle database. The complexity of migrating data and potential reworking of the application could lead to higher costs and a more complicated architecture.