- 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.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AI crypto coins rally ahead of ChatGPT creator OpenAI plans to announce Google search competitor on Monday
Barely before the hype around NVIDIA stock gain is over, AI crypto tokens have another bullish catalyst coming their way, which could provide more tailwinds to drive the price of the sector’s tokens.
Ethereum needs a bullish trigger, Joseph Lubin blasts the SEC
Ethereum co-founder alleges that the SEC aims to stifle innovation through its enforcement actions against Ethereum-related companies. Grayscale CEO says he's optimistic the SEC would approve its spot ETH ETF application.
Franklin Templeton declares it’s “Base Season” as the Coinbase low-cost L2 sees significant rise in activity
Franklin Templeton, an investment firm with up to $1.46 trillion in assets under management, has declared that “It’s Base Season.” It comes amid growing activity on the low-cost ETH L2 solution.
Binance fined by Canadian financial regulator over AML violations
Canada's financial regulation body, the Financial Transactions and Reports Analysis Centre (FINTRAC), has fined Binance for refusing to abide by the status quo for all foreign monetary bodies in the country, according to a report on May 9.
Bitcoin: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.