Written by Dr. Avishay Yanai, Soda Labs CEO

COTI V2, as a Layer 2 solution built atop the Ethereum network, intricately intertwined its development with the evolution of the underlying Ethereum blockchain. This ensures that COTI V2 consistently aligns itself with the latest upgrades and advancements within the Ethereum ecosystem, a commitment vital for maintaining optimal performance, security, and scalability. As Ethereum charts its course toward scalability and efficiency enhancements, the imminent major upgrade on the horizon is the Dencun upgrade. Within this dynamic landscape, COTI V2 positions itself as a forward-thinking and adaptive L2 protocol, strategically poised to harness the benefits of the forthcoming Dencun upgrade and contribute to the ongoing transformation of the Ethereum network.

The Dencun upgrade will greatly benefit COTI V2 in a number of ways. With an increase in transactional data per block, the Dencun update provides a significant boost to transactional latency while also significantly reducing transaction fees at the same time.

Sharding and Proto-Danksharding

Sharding fundamentally decomposes the Ethereum network into smaller, more manageable segments known as “shards.” Each shard functions autonomously, equipped with its own validators and state, enabling transactions and data to be processed in parallel. Imagine it like a team tackling different segments of a project at the same time — both efficient and effective.

Proto-danksharding, named after the researchers Protolambda and Dankrad Feist, is a preliminary step towards achieving complete sharding (also known as Danksharding), and plays a crucial role in EIP-4844. It encompasses the establishment of essential components such as transaction formats and validation rules, albeit without the actual implementation of sharding. During this phase, both validators and users continue to validate the entire scope of data availability directly.

With Sharding and Proto-danksharding, COTI V2 will be able to deploy improved smart contracts that enable faster execution, lower fees, and more flexibility for both users and developers alike.

Blob Carrying Transactions

EIP-4844 is a proposal to improve the Ethereum blockchain’s scalability and efficiency; it introduces a new type of transaction that allows for the inclusion of large amounts of data in a block without significantly increasing the size of the blockchain. The main goal of EIP-4844 is to increase the network’s capacity to handle more transactions per second, thus improving scalability and reducing transaction fees by introducing a new transaction type called “blob-carrying transactions”.

A blob is a large piece of data that is part of a transaction. Blobs are intended to temporarily store data off-chain to reduce the amount of data that needs to be permanently stored on the blockchain. Blob-carrying Transactions are special transactions that include blobs. They allow for the inclusion of additional data (such as rollup batched transactions or large datasets) without bloating the blockchain.

By allowing transactions to carry blobs, EIP-4844 enables the network to include more data in each transaction. This is crucial for layer 2 scaling solutions like rollups, which can batch many transactions into one and publish them to the blockchain as a single large transaction. So far, L2’s like starkware and arbitrum, used the call-data to pass transactions’ data to the blockchain. While call-data’s original purpose is to pass arguments and parameters to functions and so is permanently stored in the blockchain, the data in blobs is intended to be stored off-chain temporarily, and only permanently store a short cryptographic commitment to that data (a KZG commitment in this case). This means it doesn’t permanently take up space on the blockchain, which helps maintain efficiency and reduces the cost of storage. Even though the blob data is stored off-chain, EIP-4844 ensures that this data is available for a certain period. This is necessary to ensure that the network can validate and process transactions that include blobs.

Since permanently storing data on the blockchain is expensive, e.g., currently, 95% of the transaction fees on Starknet are due to the transaction costs on Ethereum Mainnet (the rest 5% is compute) [reference]. The EIP-4844’s mechanism enables L2s to significantly reduce that cost and in turn, the transaction fees as the blob data is very large (~128KB) and much cheaper than call data. The EVM cannot access and execute this data, and can only see the commitment to this data. Additionally, this data is saved for only one month instead of being stored permanently.

Blob-carrying transactions are set to decrease gas fees on Ethereum L2s by up to 75%, keeping the cost of transactions on COTI V2 extremely low.

EIP-4844 and COTIV2

Existing L2 solutions must adjust their architecture to comply with the new, cost-effective standard. COTI V2’s Layer 2 is designed from the outset to embrace this new standard. This strategic integration aims to significantly reduce transaction fees for both COTI V2’s dApps and users, positioning the protocol at the forefront of scalability and efficiency within the evolving Ethereum ecosystem.

COTI V2’s design not only ensures smooth integration with upcoming Ethereum upgrades but also positions the protocol to actively contribute to the ongoing transformation of the Ethereum network, paving the way for groundbreaking advancements and innovations.

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How COTI V2 Benefits from the Ethereum Dencun Upgrade was originally published in COTI on Medium, where people are continuing the conversation by highlighting and responding to this story.