What Is Ethereum’s EIP-4844 Update? How Proto-Danksharding Can Reduce Gas Fees

Learn about Ethereum’s Cancun-Deneb upgrade, a major protocol update to reduce gas fees and enhance scalability through Proto-Danksharding.

Key Takeaways:

• Ethereum’s Cancun-Deneb upgrade includes EIP-4844, also known as Proto-Danksharding, which aims to improve scalability and reduce gas fees.
  
• Sharding is a technique that divides a blockchain network into smaller units, known as ‘shards’.
  
• Danksharding, which utilises large ‘data blobs’ to increase transaction throughput, is the current design proposal for sharding on Ethereum.
  
• Proto-Danksharding is an interim step towards full Danksharding, aiming to decrease transaction costs and increase throughput.
  
• EIP-4844 also includes other important updates, laying the groundwork for future upgrades to the Ethereum network.

A Brief Overview of the Ethereum Cancun Upgrade

The Ethereum Cancun upgrade, also known as EIP-4844, is a highly anticipated development in the Ethereum network. It aims to address one of the key obstacles to Ethereum’s mass adoption — the blockchain’s high gas fees. Poised to make significant improvements in Ethereum’s scalability, the Cancun upgrade introduces Proto-Danksharding, a method to decrease transaction costs and increase transaction throughput.

What Is Sharding?

Sharding is a method used to enhance the capacity and performance of a blockchain network. It achieves this by partitioning the network into smaller units, called ‘shards’, which are capable of independently processing transactions. 

This parallel processing significantly boosts the efficiency of the network, lowering network congestion and subsequently reducing gas fees. Sharding is a critical step towards making the Ethereum network more scalable and accessible.

What Is Danksharding?

Danksharding is the current design proposal for sharding on Ethereum. It utilises Binary Large Objects (‘blobs’) — large amounts of data that help to further increase transaction throughput — and is designed to help lower transaction costs on the Ethereum network.

Often referred to as the ‘scalability killer’, Danksharding is expected to enhance Ethereum’s transaction processing speed to around 100,000 transactions per second (tps). It serves as the full realisation of how Ethereum rollups will achieve scalability.

What Is Proto-Danksharding?

Layer-2 (L2) rollups have rapidly developed in the past few years, and this has contributed to changes in design choices around the initial implementation of sharding. Eventually, the rollups were revised from full execution sharding (where each shard processed all transactions) to Danksharding (where shards merely store transaction data executed by the rollups).

Proto-Danksharding, the focus of the Ethereum Cancun upgrade, is a transitional phase towards full Danksharding. By introducing a new transaction type that accepts ‘data blobs’, Proto-Danksharding aims to prepare the Ethereum network for full Danksharding in the future. 

The information contained in blob data is automatically deleted after a fixed period (usually one to three months) and inaccessible to the Ethereum Virtual Machine (EVM). This helps rollups to transmit their data with lower costs, leading to reduced transaction expenses for end users.

This method is expected to significantly reduce gas fees and increase transaction throughput, moving the network one step closer to managing the capacity of a global transaction network.

How EIP-4844 Aims to Reduce Gas Fees

EIP-4844 proposes a new type of transaction, known as blob-carrying transactions, which act like ‘sidecars’ that can be attached to Ethereum transactions but include additional pieces of information. These blobs are large in size (up to 128 KB) but inexpensive compared to current calldata, making them a cost-effective solution for reducing gas fees.

By temporarily storing these blobs on the Ethereum consensus layer, EIP-4844 aims to significantly reduce the cost of data from rollups to the Ethereum base layer, thereby lowering transaction fees.

Additional Updates in the Cancun Upgrade

In addition to introducing blob-carrying transactions, the Ethereum Cancun upgrade also includes other important updates: the implementation of execution-layer logic, verification rules, and a two-dimensional fee market — all required for full Danksharding in the future. 

By implementing most of the logic required for full Danksharding, EIP-4844 provides a crucial stepping stone towards making the Ethereum network fully scalable.

At the time of writing, EIP-4844 is slated to go live on March 13, 2024.

Conclusion: The Significance of the Ethereum Cancun Upgrade

The Ethereum Cancun upgrade, or EIP-4844, is a pivotal development in the evolution of the Ethereum network. By introducing Proto-Danksharding, this upgrade is set to significantly reduce Ethereum’s gas fees and increase transaction throughput, paving the way for full Danksharding in the future. 

As the Ethereum network continues evolving and improving, upgrades like EIP-4844 will play a crucial role in enhancing the network’s capabilities as it expands closer to a platform for global transactions. With its potential to make Ethereum more competitive in the cryptocurrency space, the Ethereum Cancun upgrade marks a significant step forward in the journey towards a fully scalable and accessible Ethereum network.

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