Written by: Tia, Techub News
Amidst the rising winds and turbulent tides, or perhaps 'crisis-ridden'...
For Ethereum, this year is extraordinary. There have been peaks following the approval of the U.S. spot ETF, as well as crises in the face of competition from Solana and various 'anti-Ethereum' sentiments. Additionally, personnel changes, with researchers joining Eigenlayer as consultants and then resigning from Eigenlayer to better develop Ethereum. Moreover, there were discussions on the Beam Chain and liquidity fragmentation issues raised at Devcon. All these events highlight the significance of this extraordinary year.
Volatile price trends
From the Ethereum price chart, one can see the dramatic ups and downs it has experienced. From over $2,000 at the beginning of the year to over $4,000 in March, back to the $2,000 range, and then once again to over $4,000, it is filled with drama and uncertainty.
On January 11, 2024, a document from the U.S. Securities and Exchange Commission (SEC) revealed that the SEC approved the listing of 11 spot Bitcoin ETFs. Riding on the momentum of the ETFs and the anticipation of Ethereum's ETF approval, Ethereum skyrocketed, nearly doubling in price in just over a month.
On July 23, the U.S. spot Ethereum ETF launched. Although the trading volume exploded after the launch of the spot Ethereum ETF, breaking $200 million in just 45 minutes, the high price increase had already factored in the anticipation of the Ethereum ETF issuance. Thus, the launch of the U.S. spot Ethereum ETF did not lead to an excessively high increase.
Due to the 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, Ethereum's price experienced a consecutive 7-day decline. From a high of $3,366, it fell to a low of $2,111. Then came a prolonged period of consolidation.
Until President Trump's election victory, Ethereum surged from the $2,000 range to a peak of $4,170.
The consecutive 7-day declines and rises, as well as the roller coaster-like multiples of price changes, reflect the extreme volatility of the crypto market and demonstrate the influence of market participants' emotions, expectations, and external events. (That's right. This is crypto 🕶️)
The fluctuations behind the price changes reflect a series of undeniable ironclad logics. For example, the significant rise due to the anticipation of Ethereum ETF listings following the approval of Bitcoin ETFs at the beginning of the year, or the waterfall decline back to square one, caused by the industry's inability to sustain high prices due to a lack of real innovation and lasting market demand; and the crazy rise after Trump's administration began with optimism towards crypto...
Looking back at the price trends of Ethereum, it is not difficult to see that its ups and downs are not only driven by external macro factors; technological advancements often play a significant 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 the focus of the market. However, the price increases brought about by these advancements are not instant; instead, they 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 for redesigning Ethereum's consensus layer, aimed at further upgrading the Beacon Chain, primarily related to MEV, lowering staking thresholds, achieving fast finality with single slot finality, and ZK-ifying the entire consensus layer. This proposal rides on the breakthroughs of SNARK technology, essentially upgrading the outdated Beacon Chain design from five years ago.
Dencun Upgrade
The Ethereum Dencun upgrade is set to launch on March 13, 2024. The hard fork combines 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 transaction data, proofs, and other information in the form of Blobs to Layer 1. Since Blobs serve as temporary storage and access for off-chain data, using them will significantly reduce the costs for Rollups compared to the original calldata. However, this has also led to a substantial decline in Ethereum's revenue.
EIP-4844 is a rather controversial EIP. In the short term, it is indeed the cause of a significant decline in Ethereum's revenue and one of the main criticisms against Ethereum; however, some refer to this EIP as 'a small step for Sharding, a big step for Ethereum scalability'. Its specific long-term impact remains uncertain.
The Dencun upgrade also includes several EIPs aimed at improving Ethereum's 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.
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 substantial changes cannot be combined with Verkle, the Pectra upgrade includes a series of other changes before implementing 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 enable nodes to generate smaller proofs regarding 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 planned to be activated on the mainnet in early 2025. Notably, account abstraction EIP-7702 plays a crucial role in extending smart account functionality to EOAs.
EIP-7702 is an improvement over 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 introduces a smart contract called EntryPoint to allow smart contracts to behave like user accounts), if ERC-4337 does not require changes to the execution layer or consensus layer to implement account abstraction, EIP-3074 requires the implementation of a hard fork in Ethereum. It primarily expands smart account functionality to EOAs by introducing two operation codes—AUTH and AUTHCALL.
EIP-7702 is a further advancement of EIP-3074. Unlike EIP-3074's operation code implementation of smart account mode for EOAs, EIP-7702 allows EOAs to store an address called 'delegation indicator,' which points to a smart contract. When a transaction is sent to EOA, it can execute the code at this designated address as if it were executing its own code, similar to how 'delegate call' works in smart contracts.
EIP-7702 brings smart account functionality to EOAs while addressing many concerns raised by EIP-3074, providing complete 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 towards 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 regarding Pectra mainly 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 passed review need to be implemented after a hard fork upgrade. Ethereum has also approved several 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). Such changes rely more on the community's recognition of the EIP, i.e., whether the community is willing to accept or actively implement it. Some EIPs that need to be implemented after a hard fork upgrade also require acceptance by users, DApps, etc., to achieve widespread adoption.
Interoperability: Cross-chain / Rollup Standards
With the Ethereum Rollup-centric roadmap and the growing variety of Layer1s, on-chain liquidity is fragmented, and one of the major advantages of on-chain, composability, is gradually lost amid this fragmentation.
Interoperability has two gradient issues that need to be resolved: 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 solve the first gradient issue. Protocols like Across have significantly improved cross-chain speed, and the transaction fees are low. Due to its intent-based architecture, the security issues of user cross-chain transactions have been completely transferred to the solver. Currently, some proposals related to cross-chain/Rollup mainly focus on resolving some preliminary standard issues.
Synchronous composability is then subsequently implemented by Based Rollup. The specific proposals related to cross-chain/Rollup are as follows:
ERC-7683
ERC-7683 is a cross-chain standard proposed jointly by Across and Uniswap, which allows all interoperable intent orders to 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 intent that all solvers can access; EIP-3370 adds identification tags to blockchain addresses, clarifying the specific blockchain network to which the address belongs, avoiding users mistakenly sending funds to the wrong network; 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 lightweight clients compatible with L2 blockchains without requiring any extra configuration from the wallet.
RIP-7755 (L2 Call Standard)
RIP-7755 is the L2 call standard, which was launched as a proof of concept on October 17 by the Base research team, aiming to achieve seamless cross-chain interoperability between different Ethereum Layer 2 networks, particularly mainstream second-layer networks like Optimism and Arbitrum. The proof of concept for RIP-7755 is applicable to blockchains compliant with the EIP-4788 standard and has been able to verify the state of OP Stack chains and Arbitrum.
Summary
The above is an overall review of the major events experienced by Ethereum in 2024. Of course, the journey of Ethereum in 2024 is far from over. It also includes the competition with Solana, criticisms of unclear positioning and centralization, major institutions starting to hold spot Ethereum ETFs (Michigan pension fund disclosed holding over $10 million in spot Ethereum ETFs), major 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 published six articles about Ethereum's roadmap, as well as AMA sessions on Ethereum research Reddit, etc.
Ultimately, everything points to an unresolved question: where does the future lie?