Written by: Tia, Techub News
The winds are rising and falling, or perhaps it is 'fraught with crisis'...
For Ethereum, this year has been extraordinary. From the highs following the approval of the U.S. spot ETF to facing competition from Solana and various 'anti-Ethereum' sentiments. Coupled with personnel changes, where researchers joined Eigenlayer as advisors, only to resign from Eigenlayer for better development of Ethereum. Additionally, there are proposals for the Beam Chain and issues of liquidity fragmentation. Each matter highlights the significance of this extraordinary year.
Fluctuating price trends
From Ethereum's price chart, one can understand how much it has experienced in terms of ups and downs. From over two thousand dollars at the beginning of the year to over four thousand dollars in March, then back to a starting price beginning with two, and then climbing back to over four thousand dollars, it has been filled with drama and uncertainty.
On January 11, 2024, documents from the U.S. Securities and Exchange Commission (SEC) showed that the SEC approved the listing of 11 spot Bitcoin ETFs. Riding the wave of ETF optimism and expectations for Ethereum's ETF approval, Ethereum surged dramatically, nearly doubling in price in just over a month.
On July 23, the U.S. spot Ethereum ETF was launched, and although the trading volume surged after its launch, exceeding $200 million within just 45 minutes, the price increase was not as high as expected since the gains in the first half of the year had already factored in the expectations for the issuance of the Ethereum ETF.
Due to a lack of sustainable innovation in the industry to support high prices, after Ethereum's price surged, it began to plummet again in August. Starting from July 30, the price of Ethereum began a continuous decline for seven days, falling from a peak of $3,366 to a low of $2,111. What followed was a long period of sideways movement.
Until Trump won the presidential election, Ethereum was lifted from a price starting with 2 to a peak of $4,170.
The consecutive seven-day declines and increases, along with the dramatic fluctuations reminiscent of a roller coaster, reflect the extreme volatility of the crypto market and show the influence of market participants' emotions, expectations, and external events. (Indeed, this is crypto 🕶️)
The fluctuations behind the price changes reflect a series of ironclad logics that one must acknowledge. For example, the significant surge in expectations for Ethereum ETF listings following the approval of Bitcoin ETFs at the beginning of the year, and the waterfall-like decline back to square one due to the industry's inability to sustain itself based solely on ETFs without genuine innovation and lasting market demand; or the crazy surge following Trump's rise to power, where the crypto market was viewed with optimism...
Looking back at Ethereum's price trends, it's not hard to see that its fluctuations are not only driven by external macro factors; technological advancements often play an important 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, every technological breakthrough becomes the focus of the market. However, the increases brought about by these advancements are not immediate; they are often overshadowed by short-term market sentiments.
Beam Chain, Dencun Upgrade, Pectra Upgrade, and Other EIPs
Beam Chain
The Beam Chain was proposed by Ethereum researcher Justin Drake at Devcon in Thailand. Beam Chain is Justin's proposal for redesigning Ethereum's consensus layer, aimed at further upgrading the Beacon Chain, with primary goals related to MEV, lowering staking thresholds, achieving rapid finality, single slot finality, and ZK-ing the entire consensus layer. This proposal rides the wave of breakthroughs in SNARK technology, effectively upgrading the outdated Beacon Chain design from five years ago.
Dencun Upgrade
The Ethereum Dencun upgrade went live on March 13, 2024, with the hard fork incorporating two core improvements: Deneb consensus layer and Cancun execution layer updates. The highlight of the upgrade is EIP-4844 Proto-danksharding, allowing Rollups to send transaction, proof, and other data in the form of Blobs to Layer 1. Since Blobs are temporary storage and access for off-chain data, using Blobs significantly reduces the costs for Rollups compared to the original calldata. However, this also leads to a significant decrease in Ethereum's revenue.
EIP-4844 is a controversial EIP. In the short term, it is indeed the reason for the significant drop in Ethereum's revenue and one of the main criticisms of Ethereum; however, some refer to this EIP as 'a small step for Sharding, a giant leap for Ethereum's scalability,' and its specific long-term impact remains uncertain.
The Dencun upgrade also includes several EIPs aimed at improving Ethereum's usage efficiency, 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.
EIP-4788
Consensus Layer
Improve communication issues between Ethereum's execution layer and consensus layer. Before EIP-4788, the EVM could not directly access the latest directory and had to rely on indirect methods to understand what was happening in the Beacon chain. EIP-4788 proposes to place the Beacon block root (the hash tree root of the summary or parent block) into every EVM block. This way, information and data can be transmitted without relying on third parties.
EIP-7044
Consensus Layer
Improve the exit mechanism for Ethereum staking.
EIP-7045
Consensus Layer
Extend the maximum time for Attester to submit proofs.
EIP-7514
Consensus Layer
Introduce restrictions on the 'epoch churn limit', limiting the growth rate of Ethereum validators.
EIP-4844
Execution Layer
EIP-4844 is also known as the proto-danksharding proposal, which aims to reduce the Gas costs of Layer 2 data being published on Ethereum's mainnet by implementing temporary storage and access for off-chain data.
EIP-7516
Execution Layer
is an opcode that returns the base fee for the current data blob.
EIP-6780
Execution Layer
is an opcode that allows a smart contract to delete itself from the blockchain.
EIP-5656
Execution Layer
is an opcode that optimizes the process of copying data in memory.
EIP-1153
Execution Layer
is an opcode that allows smart contracts to use ephemeral storage, that is, to clear storage upon the completion of a transaction.
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 agree that no other substantial changes should be combined with Verkle, the Pectra upgrade consists of a series of other changes prior to 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 on to other nodes, and is a prerequisite for achieving a 'stateless client'.
The Pectra upgrade is tentatively scheduled to activate on the mainnet in early 2025. Among them, the important account abstraction EIP-7702 primarily aims to extend smart account functionality to EOAs.
EIP-7702 is an improvement on EIP-3074, proposed in May 2024. EIP-3074 was the community's first attempt to explore extending smart account functionality to EOAs. Unlike ERC-4337 (which allows smart contracts to behave like user accounts by introducing an intelligent contract called EntryPoint), EIP-3074 requires the implementation of an Ethereum hard fork. It primarily expands smart account functionality to EOAs through the introduction of two opcodes—AUTH and AUTHCALL.
EIP-7702 is a further step from EIP-3074. Unlike EIP-3074's opcode implementation of smart account models for EOAs, with EIP-7702, EOAs can now store an address called the 'delegated indicator' that points to a smart contract. When transactions are sent to the EOA, it can execute the code at this specified address as if executing its own code, similar to how 'delegate calls' work in smart contracts.
EIP-7702 addresses many concerns raised by EIP-3074 while bringing smart account functionality to EOAs, 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 shift focus to the Verkle Tree, EIP-7702 may be the last EIP related to account abstraction, as there may not be another two-year window to include account abstraction-related upgrades after this.
So far, other code changes related to Pectra primarily focus on 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 gone through review need to wait until a hard fork upgrade to start being used. Ethereum has also passed several significant procedural/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). Such changes rely more on community acceptance of the EIP, that is, whether the community is willing to adopt or actively implement it. Some EIPs that require starting after a hard fork upgrade also need to wait for acceptance by users, DApps, etc., to achieve widespread adoption.
Interoperability: Cross-chain/Rollup Standards
As Ethereum's Rollup-centric roadmap and various Layer 1s continue to grow, the on-chain liquidity is fragmented, and one of the biggest advantages of on-chain composability is gradually lost due to this 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, and the second is how to achieve synchronous composability.
Currently, many protocols can address the first gradient issue. Protocols like Across have significantly increased cross-chain speed with very low transaction fees. Due to its intent-based architecture, the security concerns for users crossing chains have been fully transferred to the solver. Currently, some proposals related to cross-chain/Rollup are primarily focused on addressing some preliminary standard issues.
Subsequent synchronization composability will be handed over to Based Rollup. The specific proposals related to cross-chain/Rollup are as follows:
ERC-7683
ERC-7683 is an intent cross-chain standard jointly proposed by Across and Uniswap, allowing all intent interoperation orders to share the solver network.
ERC-7683, combined with ERC-3668 and ERC-3770, will bring an initial interoperability experience to L2. ERC-7683 creates a unified framework for cross-chain intents for all solvers to integrate; EIP-3370 adds identification tags to blockchain addresses, clarifying which specific blockchain network the address belongs to, preventing users from sending funds to the wrong network; ERC-3668 CCIP Read successfully completes off-chain verification, providing a secure mechanism to access off-chain data without requiring additional trust assumptions, effectively supporting compatible L2 blockchains' light clients without requiring any extra configuration from wallets.
RIP-7755 (L2 Calling Standard)
RIP-7755 is the L2 calling standard, which was launched as a proof of concept by the Base research team on October 17, aimed at achieving seamless cross-chain interoperability between different Ethereum Layer 2 networks, especially mainstream L2 networks like Optimism and Arbitrum. The proof of concept for RIP-7755 applies to blockchains that comply with the EIP-4788 standard and can currently verify the status of OP Stack chains and Arbitrum.
Summary
The above is an overview of major events that Ethereum experienced in 2024. Of course, the journey of Ethereum in 2024 goes far beyond this. It also includes the competition with Solana, criticisms of unclear positioning and centralization, large institutions beginning 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 launched a tokenized money market fund based on Ethereum in Singapore, Wall Street giant Guggenheim tokenized $20 million in commercial paper on Ethereum), and after facing a crisis, Vitalik Buterin publishing six articles about Ethereum's roadmap and participating in an AMA on Ethereum research Reddit, etc......
And ultimately, everything points to an unresolved question: where does the future lie?
