Author: Tia, Techub News
The winds are rising and the waves are surging, or perhaps it is "fraught with danger"...
For Ethereum, this has been an extraordinary year. There have been the highs of the approval of the US spot ETF, as well as the crises of facing competition from Solana and various "anti-Ethereum" rhetoric. In addition, there have been personnel changes, with researchers joining Eigenlayer as advisors and then resigning from Eigenlayer to better develop Ethereum. There have also been the Beam Chain proposal and the issue of liquidity fragmentation raised at Devcon. All these events have highlighted the extraordinary nature of this year.
The volatile price trend
Looking at the price trend of Ethereum, we can see that it has experienced many ups and downs. From over $2,000 at the beginning of the year to over $4,000 in March, then back to the $2,000 range, and then up to over $4,000 again, it has been full of drama and uncertainty.
On January 11, 2024, SEC filings showed that the SEC had approved the listing of 11 spot Bitcoin ETFs. Riding on the wind of the ETF and the expectation of Ethereum ETF approval, Ethereum soared, with the price nearly doubling in just over a month.
On July 23, the US spot Ethereum ETF was launched. Although the trading volume of the US spot Ethereum ETF was explosive after its launch, with over $200 million in trading volume in just 45 minutes, the price did not see a significant increase, as the price increase in the first half of the year had already incorporated the expectation of the Ethereum ETF launch.
Due to the lack of sustainable innovation in the industry to support the high prices, after Ethereum's price surge, the price began to plummet again in August. Starting from July 30, Ethereum's price began a 7-day consecutive decline, from a high of $3,366 to a low of $2,111. This was followed by a prolonged sideways movement.
Until the election victory of President Trump, Ethereum once again soared, lifting it from the $2,000 range to a high of $4,170.
The consecutive 7-day declines and 7-day increases, as well as the roller-coaster-like multiple increases and decreases, reflect the extremely high volatility of the crypto market, and also show the impact of market participants' emotions, expectations, and external events. (Yes, this is crypto?️)
Behind the ups and downs are a series of undeniable iron logics. For example, the significant increase due to the expectation of Ethereum ETF listing after the approval of Bitcoin ETF at the beginning of the year, the waterfall-like decline back to the starting point due to the inability of ETF alone to sustain an industry lacking true innovation and persistent market demand; and the crazy surge due to the optimistic view of crypto after Trump took office...
Looking back at Ethereum's price trend, we can see that its fluctuations are not only driven by external macroeconomic factors, but technical progress often plays an important role. From the launch of Ethereum 2.0 to the implementation of Layer2 scalability solutions, and the continuous optimization and updates of the Ethereum network, each technological breakthrough has become the focus of the market. However, the price increases brought by these advancements are not achieved overnight, but are often obscured by short-term market sentiment.
Beam Chain, Dencun Upgrade, Pectra Upgrade and Other EIPs
Beam Chain
Beam Chain was proposed by Ethereum researcher Justin Drake at the Devcon in Thailand. Beam Chain is Justin's proposal to redesign the consensus layer of Ethereum, which is a further upgrade to the Beacon Chain, with the main goals related to MEV, reducing staking thresholds, achieving fast single-slot finality, and ZK-izing the entire consensus layer. This proposal rides on the breakthrough of SNARK technology, which is essentially an upgrade to the outdated Beacon Chain design from 5 years ago.
Dencun Upgrade
The Ethereum Dencun upgrade was launched on March 13, 2024, combining two core improvements: the Deneb consensus layer and the Cancun execution layer update. The highlight of the upgrade is EIP-4844 Proto-danksharding, which allows Rollups to send transactions, proofs, etc. in the form of Blobs to Layer1. Since Blobs are temporary storage and access of off-chain data, using Blobs will significantly reduce the cost for Rollups compared to the original calldata. However, this also means a significant decrease in Ethereum's revenue.
EIP-4844 is a rather controversial EIP. In the short term, it is indeed the main reason for the significant decrease in Ethereum's revenue, and one of the main criticisms of Ethereum; but some also call it "a small step for Sharding, a big step for Ethereum's scalability", and its long-term impact remains to be seen.
The Dencun upgrade also includes some EIPs to improve the efficiency of Ethereum usage, such as EIP-7516, EIP-6780, EIP-5656, EIP-1153, etc. The specific EIPs included in the Dencun upgrade are detailed in the table below.
Pectra Upgrade
The Pectra upgrade combines two independent upgrades: the Prague execution layer upgrade and the Electra consensus layer upgrade. The Pectra upgrade is an upgrade before the Fusaka upgrade (specifically for implementing the Verkle transition). Since Ethereum developers unanimously believe that other substantive changes should not be combined with Verkle, the Pectra upgrade is a series of other changes before the implementation of the Verkle transition. The Verkle transition represents the migration of all Ethereum state data from the Merkle Patricia tree structure to the Verkle structure. This will allow nodes to generate smaller proofs about state data, making it easier to pass to other nodes, which is a prerequisite for achieving "stateless clients".
The Pectra upgrade is tentatively scheduled to be activated on the mainnet in early 2025. The most notable is the account abstraction EIP-7702, which mainly extends the smart contract functionality to EOAs.
EIP-7702 is an improvement on EIP-3074, proposed in May 2024. While EIP-3074 was the community's first attempt to extend smart contract functionality to EOAs, by introducing two opcodes - AUTH and AUTHCALL, EIP-7702 takes a different approach. With EIP-7702, EOAs can now store an address called a "delegate descriptor", which points to a smart contract. When a transaction is sent to an EOA, it can execute the code at the specified address just like executing its own code, similar to the "delegate call" mechanism in smart contracts.
EIP-7702 not only brings smart contract functionality to EOAs, but also solves many of the concerns raised by EIP-3074, provides full compatibility with ERC-4337, and a clear upgrade path, and is planned to be included in the Pectra upgrade.
Since the focus of the Pectra upgrade will shift to the Verkle Tree after, EIP-7702 may be the last EIP related to account abstraction, as there may not be a 2-year window for including such upgrades after that.
So far, other code changes for Pectra mainly focus on improving the experience for users and smart contract developers. For a more detailed introduction to the Pectra upgrade, please refer to this article.
Other EIPs
Not all EIPs that have passed review need to wait for hard fork upgrades to start being used. Ethereum has also passed some major process/standard EIPs this year, such as the cross-chain intent standard ERC-7683 and the account abstraction standard ERC-4337 (ERC is a subset of EIP), which are more dependent on the community's acceptance of the EIP, i.e. whether the community is willing to accept or actively implement it. Some EIPs that do need to wait for hard fork upgrades to start being used also need to wait for the acceptance of users, DApps, etc. before they can achieve widespread adoption.
Interoperability: Cross-chain/Rollup standards
With the Ethereum Rollup-centric roadmap and the growing variety of Layer1s, on-chain liquidity is becoming fragmented, and one of its main advantages, composability, is gradually being lost due to the fragmented landscape.
There are two levels of interoperability issues that need to be solved: one is how to achieve fast, low-cost, and secure cross-chain asset transfers, and the second is how to achieve synchronized composability.
Currently, there are already many protocols that can solve the first level of the problem. Protocols like Across have greatly improved the speed of cross-chain transfers and the fees are also very low. Due to their intent-based architecture, the security issue for users when crossing chains has also been completely transferred to the solver. Currently, some proposals related to cross-chain/Rollup are mainly focused on solving some preliminary standard issues.
Synchronized composability will then be handed over to Based Rollup to implement. The specific proposals related to cross-chain/Rollup are as follows:
ERC-7683
ERC-7683 is a standard for intent-based cross-chain proposed by Across and Uniswap, through which all intent-based interoperability orders can share the solver network.
ERC-7683, combined with ERC-3668 and ERC-3770, will bring a preliminary interoperability experience to L2. ERC-7683 creates a unified framework for cross-chain intents that can be accessed by all solvers; EIP-3370 adds an identifier tag to blockchain addresses, clearly identifying the specific blockchain network the address belongs to, avoiding users sending money to the wrong network; ERC-3668 CCIP Read completes the off-chain verification well, providing a secure mechanism to obtain off-chain data without additional trust assumptions, which will effectively automatically support lightweight clients compatible with L2 blockchains without any additional wallet configuration.
RIP-7755 (L2 Call Standard)
RIP-7755 is an L2 call standard, with a POC launched by the Base research team on October 17, aiming to achieve seamless cross-chain interoperability between different Ethereum Layer2 networks, especially mainstream second-layer networks like Optimism and Arbitrum. The concept verification of RIP-7755 applies to blockchains that comply with the EIP-4788 standard, and can currently verify the state of the OP Stack chain and Arbitrum.
Summary
The above is an overall review of the major events experienced by Ethereum in 2024. Of course, Ethereum's journey in 2024 is far more than that. It also includes the competition with Solana, the criticism of unclear positioning and centralization, large institutions starting to hold Ethereum spot ETFs (the Michigan pension fund disclosed holding over $10 million in Ethereum spot ETFs), large institutions launching tokenized products on Ethereum (UBS launching a tokenized money market fund based on Ethereum in Singapore, Guggenheim tokenizing $20 million in commercial paper on Ethereum), and Vitalik Buterin publishing 6 articles on the Ethereum roadmap and conducting AMA on the Ethereum Research Reddit in the face of a crisis, and so on...
And ultimately, everything points to a pending question, what is the way forward?
