Article source: Techub News
Written by: Tia, Techub News
The situation is turbulent, full of ups and downs, or perhaps "crisis lurks on every side"...
This year is an extraordinary year for Ethereum. There are the climaxes after the approval of the US spot ETF, as well as the crisis of facing competition from Solana and various "anti-Ethereum" remarks. In addition, there are personnel changes. A researcher joined Eigenlayer as a consultant and then resigned from Eigenlayer to better develop Ethereum. There are also the issues of Beam Chain and liquidity fragmentation raised at Devcon. All of these things highlight this extraordinary year.
Fluctuating price trends
From the Ethereum price chart, one can understand the dramatic ups and downs it has experienced. From over two thousand dollars at the beginning of the year to over four thousand dollars in March, then back to the two thousand range, and again rising to over four thousand dollars, full of drama and uncertainty.
On January 11, 2024, documents from the US Securities and Exchange Commission (SEC) revealed that the SEC approved the listing of 11 spot Bitcoin ETFs. Riding the wave of the ETF approval and the anticipation of Ethereum's ETF approval, Ethereum soared, nearly doubling in price in just over a month.
On July 23, the US spot Ethereum ETF launched. Although the trading volume was booming after the launch, exceeding $200 million within just 45 minutes, the price increase was not as high as expected since the price increase in the first half of the year already included the anticipation of the Ethereum ETF launch.
Due to the lack of sustainable innovation to support high prices in the industry, after Ethereum's price surged, in August, the price began to fall again. Starting from July 30, Ethereum's price began a consecutive 7-day decline, dropping from a high of $3366 to a low of $2111. After that, it entered a long period of consolidation.
Until President Trump won the election, Ethereum once again surged from the 2000s to a peak of $4170.
The frequent consecutive drops and rises over 7 days, as well as the rollercoaster-like multiples of rises and falls, reflect the extreme volatility of the crypto market and show the influence of market participants' emotions, expectations, and external events. (That's right. This is crypto ?️)
The fluctuations in prices are backed by a series of ironclad logics that one must admit. For instance, the substantial increase brought about by the anticipation of the Ethereum ETF listing after the approval of the Bitcoin ETF at the beginning of the year; the waterfall decline back to square one caused by the inability of the ETF alone to sustain an industry lacking real innovation and enduring market demand; and the crazy surge due to the optimistic outlook on crypto after Trump's inauguration...
Looking back at Ethereum's price trajectory, we can easily see that its fluctuations are not solely driven by external macro factors; technological advancements often play a crucial role. From the launch of Ethereum 2.0, to the implementation of Layer 2 scalability solutions, to the continuous optimization and updates of the Ethereum network, each technological breakthrough has become a focal point of the market. However, the price increases brought about by these advancements are not immediate and 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 Devcon in Thailand. Beam Chain is Justin's proposal to redesign Ethereum's consensus layer, which serves as a further upgrade to the Beacon Chain, mainly related to MEV, lowering staking thresholds, achieving fast finality single slot finality, and ZK-fying the entire consensus layer. This proposal rides on the breakthrough of SNARK technology and is essentially an upgrade to the outdated Beacon Chain design from five years ago.
Dencun Upgrade
The Ethereum Dencun upgrade was launched on March 13, 2024, combining two core improvements: Deneb consensus layer and Cancun execution layer updates. The highlight of the upgrade is EIP-4844 Proto-danksharding, which allows Rollups to send transaction and proof data as Blobs to Layer 1. Since Blobs are temporary storage and access for off-chain data, using Blobs will significantly reduce Rollup costs compared to the original calldata. However, this also leads to a significant drop in Ethereum's revenue.
EIP-4844 is a controversial EIP. In the short term, it is indeed a major reason for the significant decline in Ethereum's revenue and one of the main criticisms against Ethereum; however, some people refer to this EIP as a 'small step for Sharding, a big step for Ethereum's scalability.' Its specific long-term impact is yet to be determined.
The Dencun upgrade also includes some EIPs aimed at improving Ethereum's efficiency, such as EIP-7516, EIP-6780, EIP-5656, EIP-1153, etc. For specific EIPs included in the Dencun upgrade, please see the table below.
EIP-4788
Consensus Layer
Improve the information exchange issues between Ethereum's execution layer and 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 on the beacon chain. EIP-4788 proposes to place the beacon block root (the hash tree root of the summary or parent block) into each EVM block. In 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 restriction on the 'epoch churn limit' to limit the speed of growth in the number of Ethereum validators.
EIP-4844
Execution Layer
EIP-4844 is also known as the proto-danksharding proposal, which reduces the gas costs for publishing Layer 2 data to the Ethereum mainnet by implementing temporary storage and access for off-chain data.
EIP-7516
Execution Layer
It is an opcode that returns the base fee for the current data blob.
EIP-6780
Execution Layer
It is an opcode that allows smart contracts to delete themselves from the blockchain.
EIP-5656
Execution Layer
It is an opcode that optimizes the process of copying data in memory.
EIP-1153
Execution Layer
It is an opcode that allows smart contracts to use temporary storage, i.e., clearing storage at the end of 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 a precursor to the Fusaka upgrade (specifically for implementing the Verkle transition). Since Ethereum developers unanimously believe that substantial changes cannot 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 Ethereum's entire state data from the Merkle Patricia tree structure to the Verkle structure. This will enable nodes to generate smaller proofs about state data, making it easier to pass on to other nodes, and is a prerequisite for achieving 'stateless clients.'
The initial plan for the Pectra upgrade is set to activate on the mainnet in early 2025. Among them, the more important is account abstraction EIP-7702, which mainly serves to extend smart account functionality to EOA.
EIP-7702 is an improvement of EIP-3074, proposed in May 2024. EIP-3074 was the community's first attempt to explore extending smart account functionality to EOA. Unlike ERC-4337 (which introduces a smart contract called EntryPoint, allowing smart contracts to act like user accounts), if ERC-4337 does not require changes to the execution or consensus layers for account abstraction, EIP-3074 requires the implementation of a hard fork in Ethereum to do so. It mainly extends smart account functionality to EOA by introducing two opcodes—AUTH and AUTHCALL.
EIP-7702 is a further advancement of EIP-3074. Unlike the opcode implementation of EIP-3074 that enables the smart account model for EOA, with EIP-7702, EOA can now store an address called 'delegated indicator' that points to a smart contract. When a transaction is sent to EOA, it can execute the code at this designated address as if executing its own code, similar to the 'delegate call' in smart contracts.
EIP-7702 brings smart account functionality to EOA while addressing many concerns raised by EIP-3074, providing 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 the Verkle Tree, EIP-7702 may be the last EIP related to account abstraction upgrades, as there may not be another two-year window to include upgrades related to account abstraction after this.
So far, other code changes related to Pectra mainly include enhancing 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 significant 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). These changes rely more on community acceptance of the EIP, that is, whether the community is willing to accept or actively implement it. Some EIPs that need to wait for hard forks to start being used also require acceptance from users, DApps, etc., in order to achieve widespread adoption.
Interoperability: Cross-chain/Rollup Standards
As Ethereum's Rollup-centered roadmap and the growing variety of Layer 1s develop, on-chain liquidity becomes fragmented and one of the greatest advantages of on-chain, composability, gradually diminishes with the fragmentation.
Interoperability has two gradient issues that need to be addressed: one is how to achieve fast, low-cost, and secure cross-chain asset transfers; the other is how to achieve synchronous composability.
Currently, there are many protocols that can address the problem of the first gradient. Protocols like Across have greatly improved cross-chain speed and have very low fees. Due to its intent-based architecture, user security issues for cross-chain transactions have been completely shifted to the solver. Currently, some proposals related to cross-chain/Rollup mainly focus on solving some preliminary standards issues.
Synchronous composability will subsequently be implemented by Based Rollup. The specific proposals related to cross-chain/Rollup are as follows:
ERC-7683
ERC-7683 is a cross-chain intent standard jointly proposed by Across and Uniswap, allowing all intent-interoperable orders to share the solver network.
ERC-7683 combines ERC-3668 and ERC-3770 to provide a preliminary interoperability experience for L2. ERC-7683 creates a unified framework for cross-chain intents, accessible to all solvers; EIP-3370 adds identification labels to blockchain addresses, clarifying the specific blockchain network to which the address belongs, preventing users from sending money to the wrong network; and ERC-3668 CCIP Read effectively completes off-chain verification, providing a secure mechanism to obtain off-chain data without additional trust assumptions, which will effectively support light clients compatible with L2 blockchains without requiring any extra configuration from wallets.
RIP-7755 (L2 Call Standard)
RIP-7755 is the L2 call standard, which was launched on October 17 by the Base research team, aiming to achieve seamless cross-chain interoperability among different Ethereum Layer 2 networks, especially mainstream layer two networks like Optimism and Arbitrum. The proof of concept for RIP-7755 applies to blockchains that meet EIP-4788 standards and can currently verify the states of OP Stack chains and Arbitrum.
Summary
The above is an overall review of the major events that Ethereum experienced in 2024. Of course, the journey of Ethereum in 2024 is far from over. It also includes competition with Solana, criticisms of unclear positioning and centralization, large institutions beginning to hold Ethereum spot ETFs (Michigan pension funds disclosed holdings of over $10 million in Ethereum spot ETFs), large institutions launching tokenized products on Ethereum (UBS launched an Ethereum-based tokenized money market fund uMINT in Singapore, Wall Street giant Guggenheim tokenized $20 million in commercial paper on Ethereum), and after facing a crisis, Vitalik Buterin published 6 articles about Ethereum's roadmap, conducting AMAs on Ethereum research Reddit, and so on...
Ultimately, everything points to an unresolved question: what lies ahead?
