Ethereum, being the leading decentralized blockchain for building smart contracts and decentralized applications (dApps), has always been at the forefront of innovation within the blockchain space. Its inception has paved the way for a wide array of decentralized solutions, transforming industries and financial systems worldwide. Yet, the Ethereum network is far from static; it continually evolves to meet growing demands, address emerging challenges, and pave the way for even broader adoption.
Cancun-Deneb Upgrade
Following the success of the Shanghai-Capella (Shapella) upgrade, which has led to new features that benefit scalability and adoption, the Ethereum developer community has already embarked on the next significant phase of growth: the Cancun-Deneb upgrade. Named after its distinct components—Cancun for the execution layer and Deneb for the consensus layer—this combined upgrade represents a significant milestone in Ethereum's history.
EIP 4844 and Proto-Danksharding
Scalability has long been a paramount concern for blockchain networks, and Ethereum is no exception. The demand for faster, more efficient, and cost-effective solutions has driven the need for technological advancements within blockchain technology. With the Cancun-Deneb upgrade, Ethereum aims to tackle scalability head-on. The cornerstone of this effort is EIP 4844, also known as Proto-Danksharding, a novel proposal set to revolutionize the way data is managed on the network.
Proto-Danksharding, a concept derived from the researchers Protolambda and Dankrad Feist, is targeted at reducing the cost and complexity of adding data from rollup transactions to the main Ethereum network. It represents a crucial step in Ethereum's long-term rollup-centric roadmap, aiming to significantly reduce gas fees on Layer-2 rollups.
By introducing this innovative method, the Ethereum network sets a new standard for scalability and efficiency. It not only addresses existing challenges but also lays the groundwork for future developments that will continue to shape the future of blockchain technology.
How EIP 4844 Will Transform the Ethereum Network
The core of EIP 4844 revolves around the introduction of blob transactions, which are essentially regular transactions accompanied by an additional binary large object or "blob." Unlike conventional transactions, where data is posted permanently on the chain, blob data is sent to consensus layer nodes and then automatically deleted after a period, greatly reducing long-term storage needs.
By allowing each transaction to carry multiple data blobs, EIP 4844 promotes efficient data management and availability, significantly enhancing the Ethereum network's capacity to handle rollup transactions.
Impact on Rollup Transactions to Ethereum and Reductions in Gas Fees
The implementation of Proto-Danksharding through EIP 4844 is expected to have profound implications on the handling of rollup transactions by Ethereum. By enabling thousands of transactions to be batched into a single one and employing blobs to carry the data, the cost of these transactions can be drastically reduced. This helps lower the floor on how low transaction fees can get on rollups.
Not only does this approach reduce the cost for individual users, but it also promises to decrease the associated gas fees by at least 10x, making interactions with the Ethereum network more accessible and affordable. These cost savings can be passed on to rollup users, enhancing the overall user experience and facilitating increased adoption.
Furthermore, the introduction of a multi-dimensional fee market, based on EIP-1559, ensures that blob transactions do not compete for block space with other transactions. This feature further streamlines the pricing for these transactions and minimizes the impact of gas fluctuations, leading to additional reductions in fees.
How Will L2s Use Blobs, and Why Will L2s Fees Be Lower?
Layer 2 solutions will leverage blobs to ensure data availability at much lower costs. Using mathematical concepts like KZG points, L2 solutions like Optimistic Rollups and ZK Rollups will verify the validity of blobs and provide proof of data integrity.
The significant reduction in data storage costs, combined with the innovative use of blobs and cryptographic proof methods, will translate into substantially lower transaction fees for users on L2 blockchains.
The upgrade will probably be a catalyst for the growth for Layer 2. With an increase in speed by 10x-100x and further reduced costs, Ethereum's ecosystem is bound to thrive. Notable projects such as Arbitrum, OP, ZKsync, and Base are already showcasing potential and will likely surge following the upgrade.
TL;DR
The upcoming Cancun-Deneb upgrade represents a pivotal moment in Ethereum's ongoing development, aiming to enhance scalability and efficiency within the network. Following the success of the Shanghai-Capella upgrade, the Ethereum community has turned its focus to this combined execution and consensus layer upgrade, EIP 4844.
EIP 4844 Proto-Danksharding introduces blob transactions to greatly reduce the cost and complexity of handling rollup data. This allows for a significant reduction in both storage needs and gas fees, facilitating increased affordability and accessibility to the Ethereum network.
EIP 4844's transformative impact extends to Layer 2 solutions, leveraging mathematical and cryptographic methods to ensure data availability at lower costs. The upgrade sets the stage for a faster and more cost-effective blockchain, boosting prominent projects such as Arbitrum, OP, ZKsync, and dYdX. As a result, the Cancun-Deneb upgrade is poised to usher in a new era of growth for Ethereum and its Layer 2 ecosystem, continuing to shape the future of decentralized applications and the broader blockchain industry.
