Understanding EIP-4844: Ethereum’s Proto-Danksharding Upgrade for Layer-2s

Introduction

Ethereum is drawing closer to another upgrade in Q4 of 2023 which will have a transformative effect on its whole ecosystem.

The Cancun-Deneb (Or Dencun) upgrade will feature the important EIP-4844 protocol, designed to boost Ethereum’s competitiveness and the performance of its slew of layer-2 scaling chains.

Also known as Proto-Danksharding, in honor of two of its researchers, Proto Lambda and Dankrad Feist, EIP-4844 is a part of the broader Ethereum Improvement Proposal protocol, which allows for the introduction of new features to its network.

It was conceived by Ethereum co-founder Vitalik Buterin (who recently shared his vision of three transitions needed to scale the network) along with a team of developers with the primary objective of lowering gas fees, particularly for layer-2 rollup solutions such as Optimism, Arbitrum, and zkSync Era, without compromising on the network’s decentralization.

But what exactly is EIP-4844, and why is it so crucial for the future of Ethereum and the development of Web3? Let’s take a closer look.

Sharding vs Danksharding vs Proto-danksharding

To fully grasp the impact of EIP-4844, it’s essential to understand what sharding and danksharding are.

Sharding is a long-time end goal for Ethereum that dates back all the way to the 2018 Casper roadmap. It involves partitioning a blockchain network into smaller units, known as ‘shards,’ to improve transaction throughput and reduce network congestion. To get there though, some preliminary steps are needed.
Danksharding is a new architectural approach that relies on data blobs to scale the Ethereum blockchain. It’s a complex process that will be implemented in phases, with EIP-4844 serving as the initial step.
In the words of Vitalik Buterin, proto-danksharding provides the “scaffolding” for future sharding upgrades. It implements most of the logic required for danksharding without actually initiating sharding.

What is EIP-4844?

In short, EIP-4844, or Ethereum Improvement Proposal 4844, aims to enhance scalability by exponentially lowering gas fees on layer-2 rollups through innovative blob-carrying transactions. Yes, you read that correctly.

Interestingly, EIP-4844 is a temporary fix – until sharding is fully supported on Ethereum and solves scaling. EIP-4844 introduces a new way to split transaction information, such as verification rules and transaction formats, without the need for full sharding.

What Are Shard Blob Transactions?

One of the most groundbreaking features of EIP-4844 is the introduction of a new transaction type known as “blob transactions”. These transactions allow for data blobs to be temporarily stored in the beacon node.

Blobs are essentially data packages around 125kB in size. Compared to regular transactions, blob transactions are cheaper to execute, but they are not accessible to the Ethereum Virtual Machine (EVM).

Scalability and Data Bandwidth

The data bandwidth for a slot in proto-danksharding is capped at 1 MB, a significant reduction from the previous 16 MB, which is a massive change aimed at alleviating Ethereum’s well-known scalability issues. The EIP-4844 update does not affect gas usage for standard Ethereum transactions.

Why is EIP-4844 A Game-Changer For Ethereum and L2s?

High gas fees have been a significant barrier to Ethereum’s mass adoption, as any DeFi user will tell you. People who tried to trade on Uniswap or flip NFTs during 2021s wild bull run (with its record-high ETH gas fees) can attest that some transactions cost hundreds of dollars in fees. Network fees on any blockchain can skyrocket when on-chain activity increases, making the network expensive and inaccessible for many users.

The advent of layer-2 side chains that use optimistic and zero-knowledge (ZK) rollup technology to compile transaction batches has done a lot to alleviate the pressure on Ethereum’s mainnet. The Optimism chain was presented in March 2022 by Proto Lambda with claims that it could potentially lower L2 transactions by up to 100x. But as things stand, when network usage and congestion soar, transactions still get unacceptably pricey.

EIP-4844 aims to be a game-changer by significantly reducing transaction fees and increasing throughput. Yet it’s only a stop-gap measure until the full implementation of data sharding, which would add around 16 MB per block of dedicated data space for rollups to use.

The Future of Ethereum and Rollups

With so much building happening on Ethereum due to its stable infrastructure and proven security, it’s no surprise that Buterin believes that the future of scaling the world’s first smart contract network will revolve around these rollup chains. Proto-danksharding is a pivotal stop on this roadmap.

Post-implementation, users can expect faster transactions and lower fees, which will enhance Ethereum’s competitiveness in the blockchain sector, and help it to stretch its massive lead over rival layer-1s such as “ETH killers” like Solana, Cardano, and EVM-compatible chains such as Avalanche and BNB Smart Chain. These chains have also all been plagued with their own development setbacks from time to time.

Conclusion

EIP-4844, or Proto-Danksharding, is more than just a not-so-catchy name; it’s a pivotal upgrade that promises to address some of Ethereum’s most pressing issues. From reducing layer-2 gas fees to paving the way for full sharding, this proposal is another worthy milestone on the road to Ethereum’s final state as the world’s computer.

The scheduled rollout in Q4 2023 should hopefully go through without any major surprises, if the network’s last few upgrades are anything to go by. Sailing was rarely smooth for any update prior to 2020’s Beacon Chain fork (2019’s Constantinople fracas comes to mind), but the ones after all breezed through with flying colors, giving ETH users and developers much-needed confidence. Let’s hope the Dencun update provides more of the same.

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