Ethereum
The Merge will not generate huge scalability gains for Ethereum, but EIP-4844 will
All eyes may be on Ethereum’s upcoming transition to Proof-of-Stake (PoS) consensus. However, there is a lesser-known update that should reduce Ethereum’s transaction costs by improving scalability – unlike The Merge.
The EIP-4844 update will introduce “proto-danksharding” alongside the next Ethereum fork after The Merge. This should increase the scalability of Layer 2 rollups by up to 100x. In the meantime, it will pave the way for full sharding implementation.
EIP-4844
This is true as the current Ethereum roadmap is funding the network’s growing Layer 2 ecosystem that will handle scalability and fee reduction, until the implementation of sharding further down the road.
Sharding will split Ethereum’s computational load into an ecosystem of small chains. They will work in parallel, with the Layer 2 chains that are expected to become the fragments of the network in the future.
According to L2fees, single token transfers cost around $0.1 on major Ethereum rollup networks, with swaps estimated at around $0.15.
But that’s not good enough, says Vitalik Buterin, co-founder and chief scientist at Ethereum. He tweeted in May that transaction fees on L2 must be below $0.05 “to be truly acceptable.”
The Merge, which is expected to come on stream in mid-September, will result in a reduction of more than 99% in grid energy consumption.
Also, there should be a drop of around 90% in new issuance of Ether. But many are erroneously anticipating that the upgrade will bring an increase in Ethereum’s scalability and a reduction in network fees.
Tim Beiko, protocol development coordinator at the Ethereum Foundation, told The Defiant that the launch of proto-danksharding should take place between six and nine months after The Merge.
However, he noted that “upgrade timelines are notoriously difficult to predict.” In addition, EIP-4844 will need to go through governance before implementation.
Sharding and Proto-Danksharding
Proto-danksharding is called Dankrad Feist from the Ethereum Foundation. Feist designed danksharding, the current version of sharding, which is expected to be introduced as part of the Ethereum scaling roadmap.
Proto-danksharding is the first of Ethereum’s two-part process to introduce sharding. It will implement most of the infrastructure for sharding before the network actually becomes sharded.
This will include, for example, transaction formats; the verification rules; the consensus logic; and execution and gas price adjustments.
Full danksharding is also indicated to further improve Ethereum’s scalability by an order of magnitude. With implementation scheduled for two to three years.
With danksharding, each validator only needs to download a small part of the block. That is, this allows block size and throughput to increase about 100 times in rollups compared to today.
Rollups have emerged as Ethereum’s premier tier 2 scaling solution. So companies like Arbitrum, Optimism, and Polygon have adopted them. They work by bundling transactions executed on a low-cost tier 2 network, which are then sent in batches for validation on the Ethereum base tier to reduce transaction fees.
Mofi Taiwo, engineer at OP Labs, the team behind Optimism, told The Defiant:
“From the perspective of L2s and other apps, the user experience of proto-danksharding is the same as that of full sharding. This allows Ethereum to offer a complete data availability solution for rollups while full sharding is in development, dramatically reducing its costs,” he said.
Replacing call data with blobs
Buterin co-authored the EIP-4844 proposal with other Ethereum researchers in late February. This was about a week after the development of the first proto-danksharding prototype at the ETHDenver hackathon.
Proto-danksharding will allow transactions to load “blobs” in place of calldata. Blobs are much smaller and cheaper for the network to process than the call data it will replace.
According to Diederik Loerakker, a researcher at the Ethereum Foundation and OP Labs, “data blobs are the first milestone for full Ethereum sharding, allowing rollups… to grow 100x in capacity.”
As Buterin pointed out, the upgrade will result in “major scalability gains. That’s because this data is not competing with the gas usage of existing Ethereum transactions.”
Deleting historical data
Historical data will also be deleted from the network after 30 days once EIP-4844 takes effect.
“The purpose of the Ethereum consensus protocol is not to guarantee the storage of all historical data forever,” said Buterin. “Instead, the goal is to provide a very secure real-time bulletin board. At the same time, it will leave room for other decentralized protocols to do long-term storage.”
Removing the need to store historical data is one of the key features of the EIP-4844 that will drive increased scalability of rollups.
“Rollups… generate a lot of data that they need to post back to L1. And proto-danksharding provides a cheaper way to do that,” Taiwo said. “This design is especially suited for rollups because they don’t need permanent storage. But rather a strong guarantee that the data is available on the Ethereum network for a specific period of time.”
Buterin said that erasing historical data only poses risks to individual applications, not to Ethereum itself.
“It makes sense for applications to take on the burden of storing relevant data for themselves,” he said. “Block explorers, API providers and other data services will likely store the full history.”
In a recent appearance on The Defiant podcast, Justin Drake, a researcher at the Ethereum Foundation, described the need for each validator to download the entire Ethereum blockchain as “redundant work”.
Looking to the future
Finally, Taiwo noted that the number of rollups using EIP-4844 will affect the scalability gains achieved when proto-danksharding is released.
“More rollups leveraging EIP-4844 will increase competition for blob space on the network. But rates will still be significantly reduced as opposed to a network without the scale benefits of protodanksharding,” he said.
Warning: The text presented in this column does not necessarily reflect the opinion of CriptoFácil.
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