The following is a lightly edited excerpt of my post on Ethereum’s KZG Summoning Ceremony, focussing specifically on EIP-4844.
Ethereum’s next major update is on its way.
EIP-4844, better known as Proto-Danksharding, is intended to make Ethereum a better home for Layer 2 (L2) platforms and ultimately improve the scalability of the whole system, reducing fees for end-users. It does this by introducing a large quantity of short-term data storage to Ethereum, which will make it much cheaper for L2s to post data to the platform.
Of course, this likely doesn’t mean much to most people. So, to properly understand what Proto-Danksharding is and why it matters, we first need to understand a bit of background information. And, it all starts with Ethereum’s poor performance.
If you paid any attention to crypto in the last bull run, then you probably heard a lot of people saying the same thing: "Ethereum sucks!" That's because, during times of high demand, Ethereum transactions are both slow and expensive -- especially when compared to competitors like Solana.
You might assume this is because Ethereum is older than the cheaper blockchains and therefore has worse, outdated technology. However, that's not the case. In reality, Ethereum's poor performance and high fees are entirely intentional.
You might think that's crazy. After all, why would anyone choose to provide a terrible user experience? Well, it's because Ethereum is simply prioritising something else: decentralisation.
There's a lot that could be said here, but I'm going to save most of it for another time.
What you need to know is that Ethereum is designed to minimise the barrier to entry for anyone wanting an active role in the network. This ‘decentralises’ Ethereum by enabling a vast army of ordinary individuals to contribute to the network’s day-to-day operations, rather than limiting that ability to those with the wealth and resources necessary to run powerful hardware. In practice, it means Ethereum’s software must be able to run on all sorts of computers -- including fairly cheap, low-powered ones. And that places a severe limitation on the platform. Ethereum blocks cannot contain a large quantity of transactions or data because that would overwhelm the low-end computers in the network.
As a result, it doesn't take a significant increase in transaction volume to saturate Ethereum's blocks. When that happens, users are forced to outbid one another to ensure their transaction is prioritised and included in a block. And that very quickly spirals into the sky-high transaction fees we all love to complain about.
Of course, Ethereans recognise the problem here. They certainly don't want to create a system that anyone can help run but only the rich can afford to use. And so they've come up with a plan. One that will allow them to retain the accessible, decentralised core of the system while also increasing capacity and reducing transaction fees for end users. And that plan is Layered Scaling.
Layered scaling is ultimately about aggregating as much activity as possible into a small number of Ethereum transactions.
The idea is to shift most day-to-day transactions away from Ethereum and onto new Layer Two (L2) platforms. These platforms are built with performance in mind, ensuring transaction fees remain low even when demand is high.
What differentiates L2s from other high-performance blockchains is that they anchor themselves into Ethereum to inherit its security. Every so often, all of the recent L2 transactions will be batched, compressed, and represented in a single transaction on the Ethereum blockchain. In this way, all the activity still takes place on the Ethereum blockchain, albeit less directly. But, it’s still enough to ensure every L2 transaction is ultimately verified and secured by Ethereum.
That leads to the ultimate win-win scenario for end users. They still enjoy all the benefits of Ethereum and its robust, decentralised design but they don't suffer with its low throughput, slow transactions, and exorbitant fees.
Years of research have convinced Ethereans that this layered approach is the best way to build and scale a blockchain. The problem is, Ethereum wasn't built with this methodology in mind. So, some modifications are required to get the most out of this more modular design.
One of the biggest issues is storing data.
Remember how Layer Twos aggregate all their recent transactions and represent them in a single Ethereum transaction. Well, that Ethereum transaction must contain a fair amount of data -- essentially a summary of all the L2's recent activity.
And, here's the problem, Ethereum only has one kind of data storage: permanent. When an L2 posts a bunch of data to Ethereum, everyone in the Ethereum network must hold onto that data forever. That's not easy to do, and it places a significant burden on the computers in the network. That isn’t good for Ethereum, especially because its priority has always been minimising the burden on those computers to keep the network decentralised.
The situation is also not good for the L2s. Ethereum doesn't want people filling blocks with data and overwhelming the low-end computers in the network, so it charges a high price for data storage. As a result, L2s must pay a lot of money to make their settlement transaction on Ethereum, and the L2's users must pay higher fees to account for that. Again, this is particularly silly when the whole point of the L2s is to provide a low-fee environment.
So, we need a better solution for storing data. And, this is where Proto-Danksharding comes in.
Proto-Danksharding (officially named EIP-4844) will introduce a new type of transaction to Ethereum, and these transactions will unlock a new kind of short-term storage.
The new transactions are called blob-carrying transactions.
Believe it or not, blob is a technical term. It's short for Binary Large Object, which refers to an arbitrarily large chunk of data. So, when we say 'blob-carrying transaction', we just mean a transaction that is associated and travelling with some arbitrary piece of data. Data that might, for example, summarise a whole bunch of L2 transactions.
But, the word ‘blob’ is also quite appropriate here. I find it useful to think of these data chunks as literal sticky blobs that can cling to an Ethereum block like a barnacle on a boat. And, just as barnacles are scraped off of boats before they cause problems, these blobs will be scraped off of blocks and discarded before they overwhelm the network.
This is the big improvement that Proto-Danksharding will bring: short-term storage.
Any data contained in a blob will only be stored on Ethereum for a few weeks. After that, everyone in the Ethereum network is free to delete and forget about that data forever, reducing the burden on all those devices.
It's safe to do this because that information doesn't need to be stored for eternity. At least, not by all parties. The important thing is that the L2 data is distributed and made available to anyone who might need it. Sticking it onto the outside of an Ethereum block and distributing it across an un-censorable global network is a pretty good way to ensure all interested parties have access. After a few weeks, those parties should have had plenty of time to make permanent copies or to do whatever they need to do with that data.
Blob-carrying transactions are a big win for Ethereum. The short-term storage minimises the strain placed on the Ethereum network and doesn't threaten its decentralisation in the way permanent storage might.
It's also good for the L2s. Because short-term storage is less burdensome than permanent storage, a greater quantity can be offered at a much lower price. Therefore, Layer Twos won't need to pay anywhere near the costs they currently pay to settle on Ethereum, and they can pass those savings on to end users.
By introducing short-term data storage, Proto-Danksharding puts right the contradictions of Ethereum’s current scalability solution.
Ethereum will no longer face the burden of permanent data storage, and L2s won’t pay through the nose to access that storage. Meanwhile, end-users will pay lower fees on platforms that are even more competitive with high-throughput, low-fee blockchains like Solana.
Overall, then, Proto-Danksharding and blob-carrying transactions represent a massive step forward for Ethereum and its layered scaling ambitions.
Follow Topic Crypto
📺 Youtube: https://www.youtube.com/c/TopicCrypto
🐦 Twitter: https://twitter.com/topiccrypto
📚 Medium: https://medium.com/topic-crypto
📚 Mirror: https://mirror.xyz/topiccrypto.eth
Disclaimer: Anything expressed here is my own opinion stated for informational and educational purposes; nothing I say should be taken as investment or financial advice. Many projects mentioned on this channel are highly experimental and therefore come with risks. Please evaluate your own risk tolerance before experimenting with these projects.
I may own some of the cryptoassets mentioned.