Author: Tia, Techub News
Winds and clouds, ups and downs, or "crisis lurking"...
For Ethereum, this year has been an extraordinary one. 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 proposed at Devcon and the issue of liquidity fragmentation. All these events have highlighted the extraordinary nature of this year.
The volatile price trend
Looking at the Ethereum price trend chart, we can see how much ups and downs it has experienced. From over $2,000 at the beginning of the year to over $4,000 in March, then back to the two-digit 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 the trading volume exceeding $200 million in just 45 minutes, the price did not see a significant increase due to the price increase already factoring in the expectation of the Ethereum ETF issuance in the first half of the year.
Due to the lack of sustainable innovation in the industry to support high prices, after Ethereum's price skyrocketed, it 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 President Trump's election victory, Ethereum then rose again, lifting it from the two-digit 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 at the beginning of the year due to the expectation of Ethereum ETF listing after the approval of Bitcoin ETF, the waterfall-like decline back to the starting point due to the inability of ETF alone to sustain an industry lacking true innovation and lasting market demand; and the crazy rise due to the optimistic view of crypto after Trump's inauguration...
Looking back at Ethereum's price trend, we can see that its ups and downs 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, to the continuous optimization and updates of the Ethereum network, each technological breakthrough has become the focus of the market. However, the 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 the staking threshold, 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 old 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 leads to a significant drop in Ethereum's revenue.
EIP-4844 is a rather controversial EIP. In the short term, it is indeed the main reason for the significant drop 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 scaling", 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, and EIP-1153. The specific EIPs included in the Dencun upgrade are detailed in the table below.
EIP-4788 | Consensus Layer | Improve the communication between the Ethereum execution layer and the consensus layer. Before EIP-4788, the EVM could not directly access the latest directory, it had to rely on indirect methods to understand what was happening in the Beacon Chain. EIP-4788 proposes to include the Beacon block root (the hash tree root of the summary or parent block) in each EVM block. This way, information and data can be transmitted without relying on a third party. |
EIP-7044 | Consensus Layer | Improve the exit mechanism for Ethereum staking |
EIP-7045 | Consensus Layer | Extend the maximum time for Attesters to submit proofs. |
EIP-7514 | Consensus Layer | Introduce a limit on the "epoch churn limit" to limit the speed of growth in the number of Ethereum validators. |
EIP-4844 | Execution Layer | |
EIP-7516 | Execution Layer | An opcode that returns the current data blob base fee. |
EIP-6780 | Execution Layer | An opcode that allows smart contracts to self-destruct. |
EIP-5656 | Execution Layer | An opcode that optimizes the process of copying data in memory. |
EIP-1153 | Execution Layer | An opcode that allows smart contracts to use ephemeral storage, which is cleared at the end of the transaction execution. |
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 transmit 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 important aspect is the account abstraction EIP-7702, which mainly extends the smart account functionality to EOAs.
Here is the English translation, with the terms in <> retained as is:EIP-7702 is an improvement on EIP-3074, proposed in May 2024. EIP-3074 was the first attempt by the community to explore extending smart account functionality to EOAs. Unlike ERC-4337 (which introduces a smart contract called EntryPoint to allow smart contracts to behave like user accounts), if ERC-4337 is an implementation of account abstraction without the need to modify the execution layer or consensus layer, EIP-3074 requires an Ethereum hard fork to implement. It mainly introduces two opcodes - AUTH and AUTHCALL - to extend smart account functionality to EOAs.
EIP-7702 is a further development of EIP-3074. Unlike the opcode implementation of the smart account mode for EOAs in EIP-3074, with EIP-7702, EOAs can now store an address called a "delegate descriptor" that points to a smart contract. When a transaction is sent to the EOA, it can execute the code at the specified address just like executing its own code, similar to the "delegate call" functionality in smart contracts.
While bringing smart account functionality to EOAs, EIP-7702 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 Pectra upgrade will focus on Verkle Tree, EIP-7702 may be the last EIP related to account abstraction, as there may not be a 2-year window after that to include upgrades related to account abstraction.
So far, other code changes for the Pectra upgrade mainly include improvements to the user and smart contract developer experience. 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 a hard fork upgrade to be 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 require a hard fork upgrade to be used also need to wait for the acceptance of users, DApps, etc. before they can be widely adopted.
Interoperability: Cross-chain/Rollup Standards
With the Ethereum Rollup-centric roadmap and the growing number of Layer1s, on-chain liquidity is becoming fragmented, and one of Ethereum's biggest 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 transfer, 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 transactions 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 shifted 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 cross-chain intent standard 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 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 label 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 compatible L2 blockchain light clients without any additional configuration required by the wallet.
RIP-7755 (L2 Call Standard)
RIP-7755 is an L2 call standard, with a POC released 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 RIP-7755 concept verification 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 that Ethereum experienced in 2024. Of course, Ethereum's journey in 2024 is far more than that. It also includes the rivalry with Solana, criticism of unclear positioning and centralization, large institutions starting to hold Ethereum spot ETFs (Michigan pension fund disclosed holding over $10 million in Ethereum spot ETF), large institutions launching tokenized products on Ethereum (UBS launching a tokenized money market fund uMINT based on Ethereum in Singapore, Guggenheim tokenizing $20 million commercial paper on Ethereum), and Vitalik Buterin releasing 6 articles on Ethereum's roadmap and conducting an AMA on the Ethereum Research Reddit in the face of a crisis, and so on...
And ultimately, everything points to a pending question, which way forward?
