Ethereum is currently undergoing development updates, with the upcoming Dencun upgrade (part of ‘The Surge’ on Ethereum’s roadmap) to achieve higher scalability. The most anticipated feature is the introduction of Proto-Danksharding, a process that aims to further increase Ethereum’s transaction throughput and scalability. But what exactly is sharding in the context of blockchain technology and Ethereum, in particular? Our report explores this and other features of the Dencun upgrade.
Ethereum aims to eventually implement a particular type of sharding called Danksharding. Essentially, instead of splitting into ‘shard chains’, Danksharding uses distributed data sampling across ‘blobs’ to scale Ethereum. However, there are still steps that need to be implemented before full Danksharding is achieved. One of these is Proto-Danksharding (also known as EIP-4844), which introduces ‘data blobs’ and is an important part of the upcoming Dencun upgrade.
Rollups are limited in how cheap they can make user transactions since they currently post their transactions in CALLDATA (a data location on Ethereum’s block). This is expensive because it is processed by all Ethereum nodes and lives on-chain forever, even though rollups only need the data for a short time. In fact, over 90% of the transaction costs users pay on rollups is due to this data storage.
Proto-Danksharding introduces a new transaction type known as a ‘blob-carrying transaction’. Blobs (short for ‘Binary Large Objects’) make way for lower transaction costs (e.g., for both Layer-2 users and operators) and increase the transaction throughput of Ethereum.
Blob data operates under a separate market mechanism based on the supply and demand of blob storage. This fee market for blobs is entirely independent of the demand for block space, potentially improving flexibility and efficiency in the allocation of network resources.
For more details about the impact on L2 rollup fees, please refer to our Research report Deep Dive Into Ethereum Dencun Upgrade, exclusive for our Private users.
As mentioned, Proto-Danksharding is an intermediate step towards full Danksharding, which scales Ethereum further. Other features of Danksharding include proposer-builder separation (PBS) and data availability sampling (DAS).
Ethereum aims to have continual improvements from its current form to eventually become a fully scaled, maximally resilient platform. Vitalik Buterin had proposed a vision for the roadmap that is organised into different categories based on their impact on Ethereum’s architecture. It consists of ‘The Merge’ (which happened in 2022, ‘The Surge’ (which the upcoming Dencun upgrade is a part of), ‘The Scourge’, ‘The Verge’, ‘The Purge’, and ‘The Splurge’.
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