When is EIP-4844, and why is it considered the biggest game changer for Ethereum?
- Ethereum protocol’s proposed upgrade EIP-4844 is expected to go live in Q4 2023.
- EIP-4844 is known as proto-danksharding, its objective is to reduce fees by introducing a new transaction type.
- Ethereum developers tried to reduce transaction fees through the past few upgrades.
EIP-4844, Ethereum blockchain’s proposed upgrade, is lined up for Q4 2023. Its primary feature is called proto-danksharding. Proto-danksharding has two key objectives for the Ethereum blockchain:
- Reducing transaction fees
- Increasing transaction throughput
The Ethereum Improvement Proposal (EIP) aims to achieve these objectives through the introduction of “blobs” of data, a new transaction type on the ETH blockchain.
Also read: Ethereum buying spree likely in August as DAI whale holdings climb higher
What are EIPs and why are they important?
EIPs specify new features or processes that improve the Ethereum blockchain. The proposal defines technical specifications, and they are considered key for the community of developers to propose, debate and adapt changes to continuously improve the ETH blockchain.
EIPs are a vehicle of governance on the Ethereum blockchain. While anyone is free to propose an improvement, stakeholders in the community determine if it should be adopted or included in a network upgrade.
The Ethereum blockchain has faced a key challenge since its launch – the spike in transaction fees on the network. To address this issue, several solutions and EIPs have been proposed. EIP-4844 or proto-danksharding is set to address this as one of its key objectives.
What is EIP-4844?
EIP-4844, better known as proto-danksharding, is named after Ethereum researchers Proto Lambda and Dankrad Feist.
Sharding is another name for partitioning a database into smaller data segments. In simple terms, it's like cutting a pizza into slices. A pizza can be consumed more effectively and with higher efficiency when cut into slices, and the same can be applied to specific data segments.
There are several unique features in addition to segmenting data. While the Ethereum base layer processes around 15 TPS and layer 2 rollups take the number to 100, danksharding is predicted to eventually increase Ethereum’s throughput to 100,000.
The Ethereum blockchain is headed in the direction of a full “danksharding,” and EIP-4844 is the first step. It would increase the throughput from 100 to 1,000. While it is scheduled to occur in Q4 2023, delays are anticipated.
EIP-4844 is considered a game changer for this reason
EIP-4844 introduces blob-carrying transactions. These are similar to regular transactions with added pieces of information. Ethereum contributor Ben Edgington has summarized EIP-4844 as an improvement that “bolts blobs onto blocks.”
In the first look it may be perceived as an increase in blocksize, which is counterintuitive to increasing efficiency. However, blobspace is different from blockspace, and blobs are not visible to the Ethereum Virtual Machine. They do not occupy space on the base layer of the blockchain. Blobs are visible for a short period of time, and the space occupied by them is relatively cheaper when compared to blocks.
The scaling and cost-saving benefits of sharding comes from EIP-4844, making it a game changer improvement for the Ethereum blockchain.
The Ethereum blockchain’s future roadmap is centered on “rollups,” and EIP-4844 is a part of the same. Users will experience the difference post implementation of EIP-4844, as ETH transactions become faster and fees become relatively cheaper. This is likely to boost the competitiveness of the Ethereum blockchain.
Ethereum FAQs
What is Ethereum?
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
What blockchain technology does Ethereum use?
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
What is staking?
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Why did Ethereum shift from Proof-of-Work to Proof-of-Stake?
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
