Written by: Vitalik Buterin
Compiled by: jk, Odaily Planet Daily
On March 13, the Dencun hard fork was activated, making possible one of Ethereum’s long-awaited features: proto-danksharding (aka EIP-4844, aka blobs). Initially, the fork reduced transaction fees for rollups by more than 100x, as blobs were virtually free. Over the past day we have finally seen a surge in the volume of blobs, with fee markets activating as blobscriptions protocols start using them. Blobs are not free, but they are still much cheaper than calldata.
Left: Thanks to Blobscriptions, blob usage finally reaches the goal of 3 per block. Right: With that comes the blob fee “entering price discovery mode”. Source: https://dune.com/0x Rob/blobs.
This milestone represents a key shift in Ethereum’s long-term roadmap: with blobs, scaling Ethereum is no longer a “zero to one” problem, but a “one to many” problem. From here, significant scaling work, whether increasing the number of blobs or increasing the ability of rollups to utilize each blob, will continue, but it will be more incremental. Scaling changes related to fundamental changes to the way Ethereum operates as an ecosystem are increasingly behind us. Additionally, the focus has slowly shifted, and will continue to slowly shift, from L1 issues like PoS and scaling, to issues closer to the application layer. The key question this article will explore is: Where will Ethereum go next?
The future of Ethereum scaling
Over the past few years, we have witnessed Ethereum’s gradual transformation into an L2-centric ecosystem. Major applications began to move from L1 to L2, payments began to be based on L2 by default, and wallets began to build their user experience around the new multi-L2 environment.
A key part of the Rollup-centric roadmap from the beginning has been the concept of independent data availability spaces: special portions of space within a block, inaccessible to the EVM, that can store data for second-tier projects like rollups. Since this data space is not accessible to the EVM, it can be broadcast separately from a block and verified separately. Ultimately, it can be verified through a technique called data availability sampling, which allows each node to verify that the data was published correctly by randomly checking several small samples. Once implemented, the blob space can be expanded significantly; the ultimate goal is 16 MB per slot (~1.33 MB/second).
Data availability sampling: Each node only needs to download a small part of the data to verify the availability of the overall data
EIP-4844 (i.e. blobs) does not provide us with data availability sampling. But it does set up the basic framework in such a way that from here, data availability sampling can be introduced and blob counts can be increased behind the scenes, all without any involvement from the user or application. In fact, the only "hard fork" required is a simple parameter change.
From here, the two directions you will need to continue to develop are:
Gradually increase blob capacity, ultimately achieving a panoramic view of data availability sampling, providing 16 MB of data space per time slot;
Improve L2 to better utilize the data space we have.
Bringing DAS to life
The next stage could be a simplified version of DAS called PeerDAS. In PeerDAS, each node stores a significant portion (e.g. 1/8) of the total blob data, and nodes maintain connections to many peers in the p2p network. When a node needs to sample a specific piece of data, it asks one of the peers known to be responsible for storing that piece of data.
If each node needs to download and store 1/8 of all the data, then PeerDAS theoretically allows us to increase the size of the blobs by 8x (actually 4x, since we lose 2x due to the redundancy of erasure coding) . PeerDAS can be rolled out over time: we could have a phase where professional stakers continue to download full blobs, while individual stakers only download 1/8 of the data.
In addition to this, EIP-7623 (or alternatives like 2D pricing) could be used to set tighter limits on the maximum size of execution blocks (i.e. "regular transactions" in a block), which would allow both increasing blob targets and L1 gas cap becomes safer. In the long term, more sophisticated 2D DAS protocols will allow us to improve across the board, further increasing blob space.
Improve L2 performance
Today, Layer 2 (L2) protocols can be improved in four key ways.
1. Use bytes more efficiently through data compression
My data compression overview diagram can still be viewed here;
Naively speaking, a transaction takes up about 180 bytes of data. However, there are a range of compression techniques that can reduce this size in several stages; with optimal compression, we may eventually reduce the amount of data per transaction to less than 25 bytes.
2. Only use L1’s optimistic data technology under special circumstances to ensure the security of L2
Plasma is a class of technology that allows you to keep data on L2 under normal circumstances while providing security equivalent to Rollup for some applications. As with EVMs, Plasma cannot protect all coins. But Plasma-inspired builds can protect most coins. And a much simpler build than Plasma could vastly improve today's validiums. L2s unwilling to put all their data on-chain should explore such technology.
3. Continue to improve execution-related restrictions
Once the Dencun hard fork is activated, it reduces the cost of rollups by 100x to set up to use the blobs it introduces. Base rollup saw an immediate surge in usage:
This in turn caused Base to hit its internal gas limit, causing an unexpected spike in fees. This leads to a broader recognition that Ethereum’s data space isn’t the only one that needs to expand: rollups internally need to expand too.
Part of this is parallelization; rollups can achieve something similar to EIP-648. But equally important is storage, and the interplay between computation and storage. This is an important engineering challenge for rollups.
4. Continue to improve security
We are still far from a world where rollups are truly protected by code. In fact, according to l2 beat, only one of these five, only Arbitrum, fully supports EVM, even reaching what I call "stage one."
This needs to be addressed head on. While we're not yet confident enough in the code for a sophisticated optimistic or SNARK-based EVM validator, we're definitely capable of getting halfway there, and have safety committees that can step in at high thresholds (e.g., what I'm proposing is 6- of-8; Arbitrum is executing 9-of-12) to change the behavior of the code.
The standards of the ecosystem need to become stricter: so far, we have been tolerant and accepting of any project that claims to be "on the path to decentralization." By the end of the year, I think our standards should be raised and we should only consider projects that have at least reached Phase 1 as rollups.
After this, we can cautiously move towards the second stage: a rollups truly supported by the code, and a safety committee only if the code "obviously contradicts itself" (e.g., accepts two incompatible state roots, or two different A world where you can only intervene if you give different answers). One path towards this goal safely is to use multiple provers.
What does this mean for the development of Ethereum?
At ETHCC in the summer of 2022, I gave a presentation describing the current state of Ethereum development as an S-curve: we are entering a period of very rapid transition, after which development will slow down again as L1 consolidates and development refocuses on the user and application layers.
Today, I would say we are clearly in the decelerating, right-hand portion of this S-curve. As of two weeks ago, the two biggest changes to the Ethereum blockchain - the switch to proof-of-stake and the refactoring to blobs - have been completed. Future changes will still be important (e.g. Verkle trees, single-slot finality, intra-protocol account abstraction), but they will be less dramatic than Proof-of-Stake and sharding. In 2022, Ethereum is like an airplane changing engines mid-flight. In 2023, it replaced its wings. The Verkle tree transition is the main remaining really important change (we already have a testnet); the others are more like replacing the rear wing.
The goal of EIP-4844 is to make a large one-time change in order to set long-term stability for rollups. Now that blobs are out, future upgrades to full danksharding with 16 MB blobs, or even converting cryptography to STARKs on 64-bit goldilocks fields, can happen without the need for rollups and any further action by the user. It also reinforces an important precedent: Ethereum's development process is executed according to a long-standing, well-known roadmap, and applications built with the "new Ethereum" in mind (including L2) gain a long-term stable environment .
What does this mean for applications and users?
Ethereum’s first decade was largely a training phase: the goal has been to get Ethereum L1 off the ground, and applications have primarily occurred among a small group of enthusiastic individuals. Many have argued that the lack of mass adoption over the past decade proves that cryptocurrencies are useless. I have always argued against this view: nearly every non-financial speculative crypto application relies on low fees — so when we face high fees, we shouldn’t be surprised that we’re primarily seeing financial speculation.
Now that we have blobs, this key limitation that has been holding us back starts to melt away. Fees have finally come down significantly; my seven-year-old statement that the Internet of Money should cost no more than five cents per transaction has finally come true. We're not completely out of the woods yet: if usage grows too quickly, fees may still increase, and we'll need to keep working on scaling blobs (and rollups separately) over the next few years. But we see the light at the end of the tunnel...er...dark forest.
For developers, this means one simple thing: we no longer have any excuses. Until a few years ago, we set a low bar for ourselves, building applications that were clearly unusable at scale, as long as they worked as prototypes and were reasonably decentralized. Today, we have all the tools we need, and indeed most of the tools we will ever have, to build applications that are simultaneously cypherpunk and user-friendly. So we should go out and do it.
Many people are rising to this challenge. Daimo Wallet clearly describes itself as Venmo on Ethereum, aiming to combine the convenience of Venmo with the decentralization of Ethereum. In the world of decentralized social, Farcaster does a great job of combining true decentralization (e.g., check out this guide on how to build your own alternative client) with a great user experience. Unlike previous “social finance” crazes, the average Farcaster user isn’t there to gamble — passing a key test for a truly sustainable crypto app.
This post was sent via the main Farcaster client Warpcast, and this screenshot is from the alternative Farcaster + Lens client Firefly.
These successes are what we need to build on and extend to other application areas, including identity, reputation and governance.
Applications built or maintained today should have the Ethereum of the 2020s as a blueprint
The Ethereum ecosystem still has a large number of applications operating around a workflow that is fundamentally “2010s Ethereum.” Most ENS activity still occurs in the first layer (L1). Most token issuance also happens on the first layer, with no serious thought being given to ensuring that bridging tokens are available on the second layer (L2) (for example, check out this ZELENSKYY memecoin fan applauding the coin’s ongoing donations to Ukraine, But complaining about L1 fees makes it too expensive). In addition to scalability, we're also behind on privacy: POAPs are all exposed on-chain, which may be the right choice for some use cases, but very suboptimal for others. Most DAOs and Gitcoin Grants still use fully transparent on-chain voting, making them highly susceptible to bribery (including post-event airdrops), which has been shown to severely distort contribution patterns. Today, ZK-SNARKs have been around for many years, yet many applications still haven’t started using them properly.
These are hard working teams who have to deal with a large existing user base, so I don't blame them for not upgrading to the latest technology wave at the same time. But soon, this upgrade will need to happen. Here are some key differences between a fundamentally 2010s Ethereum workflow and a fundamentally 2020s Ethereum workflow:
Basically, Ethereum is no longer just a financial ecosystem. It is a full-stack alternative to "centralized technology" in most areas, and even offers some things that centralized technology cannot (e.g., governance-related applications). We need to build with this broader ecosystem in mind.
in conclusion
Ethereum is undergoing a decisive transition from an era of "rapid L1 progress" to an era where L1 progress will still be significant, but slightly more modest and less disruptive to applications.
We still need to complete the expansion. This work will take place more behind the scenes, but is still important.
App developers are no longer just building prototypes; we are building tools for millions of people to use. Across the entire ecosystem, we need to completely adjust our mindset accordingly.
Ethereum has evolved from "just" a financial ecosystem to a more complete independent decentralized technology stack. Across the entire ecosystem, we need to adjust our mindset on this entirely accordingly.
