Ethereum EIP-4844 Upgrade Explained

EIP-4844, also known as proto-danksharding, is an Ethereum protocol upgrade proposal that seeks to reduce fees and improve transaction throughput. It plans to achieve this by introducing a new transaction type that can handle data blobs. Essentially, EIP-4844 can be described as "attaching blobs to blocks." It acts as a stepping stone towards achieving full danksharding in the future, which would allow Ethereum to handle the capacity needed for a global transaction network.

Basics

To address the challenges posed by its growing user base, Ethereum developers have been actively working on upgrades. These upgrades, such as The Merge and rollups, have helped enhance transaction throughput and reduce costs on the Ethereum network.

Despite these improvements, transaction fees remain a concern for many users, and the network's capacity still falls short of widespread adoption. To overcome these obstacles, Ethereum has identified data sharding as a long-term solution.

To pave the way for implementing data sharding, a transitional solution called EIP-4844 has been proposed. EIP-4844 aims to prepare Ethereum for a future where full danksharding can be achieved. This advanced sharding technique is expected to enable a significantly higher transaction throughput, reaching around 100,000 transactions per second (TPS), while maintaining decentralization and security.

The implementation of data sharding is a complex undertaking, requiring careful planning and execution. Hence, EIP-4844 serves as an intermediate step to gradually transition Ethereum towards the ultimate goal of achieving efficient and scalable transaction processing on a global scale.

EIP-4844 in a Nutshell

EIP-4844 is an Ethereum Improvement Proposal that aims to enhance the Ethereum protocol by introducing new features and solutions. It is named after two Ethereum researchers, Proto Lambda and Dankrad Feist.

To grasp the concept of EIP-4844, it is crucial to understand sharding. Sharding involves partitioning databases into smaller segments to improve efficiency and performance. When applied to Ethereum, sharding, specifically danksharding, is expected to reduce transaction costs and increase throughput significantly. Ethereum's current base layer processes approximately 15 TPS, while layer 2 rollups handle around 100 TPS as of Q2 2023. Danksharding has the potential to increase Ethereum's TPS to approximately 100,000, offering a significant scalability boost.

Danksharding differentiates itself from previous Ethereum and non-Ethereum sharding proposals in several ways. Rather than focusing solely on transactions, danksharding prioritizes providing more space for data blobs. Additionally, it introduces a merged fee market, where a single proposer selects transactions for all shards instead of each shard having its proposer. To address the issue of maximal extractable value (MEV), a method called proposer/builder separation will be implemented. Proposers, who were previously known as miners before the Ethereum Merge, will play a vital role in choosing which transactions to include in the next block.

EIP-4844, also known as proto-danksharding, acts as a stepping stone toward full danksharding. It is projected to increase TPS to around 1,000. Notably, EIP-4844 will introduce a new transaction type that accepts data blobs, which is crucial for achieving full danksharding. The implementation of EIP-4844 is expected in the second half of 2023, though there might be some potential delays.

How Does EIP-4844 Work?

EIP-4844 introduces a new transaction type called blob-carrying transactions, which include additional pieces of information known as "blobs." These transactions aim to enhance the handling of data within the Ethereum network.

The concept of blob-carrying transactions can be summarized as attaching blobs to blocks, allowing for a larger volume of data to be processed. This innovative approach expands the capabilities of the Ethereum network without resorting to arbitrarily large blocks, which could impact decentralization and computational requirements.

EIP-4844 represents a strategic development within Ethereum, demonstrating the ongoing efforts to improve the efficiency and scalability of the network. By incorporating blob-carrying transactions, Ethereum can effectively manage and process a greater amount of data, contributing to its broader adoption and utility.

Blockspace and blobspace exhibit significant differences that are worth noting.

Note: Blobs have bounded storage costs and no execution costs, but each node bears a bandwidth cost.

Blobs, which are stored on the Ethereum consensus layer and not visible to the Ethereum Virtual Machine (EVM), have a shorter lifespan than blocks and are significantly cheaper. EIP-4844 introduces blob-carrying transactions and various system changes that are necessary for full danksharding in the future, such as execution-layer logic, verification rules, and multi-dimensional fee markets. While EIP-4844 does not implement sharding, it still contributes to Ethereum's scalability and cost-saving advantages, bringing Ethereum closer to achieving the required cost and throughput levels for mass adoption.

EIP-4844 Benefits

EIP-4844 is an upcoming protocol upgrade within Ethereum's rollup-centric roadmap. The preparations for implementing EIP-4844 are progressing rapidly, with devnets already being tested and the upgrade specifications nearing completion.

Once EIP-4844 is implemented, users can expect significant improvements, such as faster transaction speeds and reduced fees. This successful upgrade will enhance Ethereum's competitiveness within the cryptocurrency space.

Some users may have concerns about accessing old blob data that has been deleted. It's important to understand that blobs are stored on the Ethereum consensus layer, which serves as a secure real-time bulletin board for long-term storage in other protocols. Therefore, although blobs themselves are deleted after weeks, their data should still be accessible in longer-term storage elsewhere.

Conclusion

EIP-4844 is a highly complicated Ethereum protocol upgrade connected to other system upgrades like proposer/builder separation and EIP-1559 blob fee adjustment. Understanding EIP-4844 is valuable for users as it prepares them for upcoming changes, resulting in lower costs and faster transactions. This significant upgrade within Ethereum's roadmap aims to enhance the network's capabilities and make it highly competitive as a global transaction network.