Written by: Tia, Techub News
The winds are surging and the ups and downs are tumultuous, or perhaps it is 'fraught with crisis'...
For Ethereum, this year is extraordinary. There have been peaks following the approval of the U.S. spot ETF, as well as crises faced amid competition from Solana and various 'anti-Ethereum' sentiments. Additionally, personnel changes occurred, with researchers joining Eigenlayer as advisors and later resigning from Eigenlayer for better development of Ethereum. There are also the Beam Chain proposed at Devcon and liquidity fragmentation issues. Each of these events highlights this extraordinary year.
Volatile price fluctuations
From the Ethereum price chart, we can see how much it has fluctuated. From over two thousand dollars at the beginning of the year to over four thousand dollars in March, then back to starting with two, and then again rising to over four thousand dollars, it's filled with drama and uncertainty.
On January 11, 2024, documents 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 ETFs and the expectations for Ethereum's ETF approval, Ethereum skyrocketed, nearly doubling in just over a month.
On July 23, the U.S. spot Ethereum ETF launched. Although trading volume was explosive after the launch, exceeding $200 million within just 45 minutes, the expected surge was not realized because the price increase earlier in the year had already factored in the launch of the Ethereum ETF.
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 continuous 7-day decline, dropping from a high of $3366 to a low of $2111. What followed was a long period of sideways movement.
Until President Trump won the election, Ethereum soared again, pulling the price up from starting with 2 to a peak of $4170.
The continuous 7-day declines and 7-day increases, along with price fluctuations that are reminiscent of a roller coaster, reflect the extreme volatility of the crypto market, and also indicate the influence of market participants' emotions, expectations, and external events. (Indeed. This is crypto 🕶️)
The fluctuations in prices are underpinned by a series of unavoidable ironclad logics. For example, the significant increase following the approval of Bitcoin ETFs at the beginning of the year raised expectations for Ethereum ETFs, and the waterfall drop back to square one caused by the inability to sustain the industry solely through ETFs, which lacked genuine innovation and lasting market demand; or the crazy surge due to Trump's presidency fostering optimism towards crypto...
Looking back at Ethereum's price movements, it is clear that its fluctuations are not only driven by external macro factors; technological advances often play a crucial role. From the launch of Ethereum 2.0, to the implementation of Layer 2 scalability solutions, to the ongoing optimization and updates of the Ethereum network, each technological breakthrough has become the focus of the market. However, the gains brought by these advances are not achieved overnight and are often obscured by short-term market sentiments.
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 the Ethereum consensus layer, aimed at further upgrading the Beacon Chain, primarily related to MEV, lowering the staking threshold, achieving fast finality single slot finality, and ZK-ifying the entire consensus layer. This proposal rides on the momentum of breakthroughs in SNARK technology, effectively upgrading the old Beacon Chain design from five years ago.
Dencun Upgrade
The Ethereum Dencun upgrade version went live on March 13, 2024, with the hard fork combining two core improvements: the Deneb consensus layer and the 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 will greatly reduce the costs of Rollups compared to the original calldata. However, this also results in a significant decrease in Ethereum's revenue.
EIP-4844 is a quite controversial EIP. In the short term, it is indeed one of the reasons leading to the significant drop 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's scalability', and its specific impact in the long term remains to be seen.
The Dencun upgrade also includes several EIPs aimed at improving Ethereum's efficiency, such as EIP-7516, EIP-6780, EIP-5656, EIP-1153, etc. For details on the specific EIPs included in the Dencun upgrade, please see the table below.
EIP-4788
Consensus Layer
Improve the information 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 on the beacon chain. EIP-4788 proposes to place the beacon block root (the hash tree root of the 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 Ethereum staking withdrawal mechanism.
EIP-7045
Consensus Layer
Extend the maximum time for Attesters to submit proofs.
EIP-7514
Consensus Layer
Introduce limits on the 'epoch churn limit' to restrict the growth rate of Ethereum validators.
EIP-4844
Execution Layer
EIP-4844 is also known as the proto-danksharding proposal, which reduces the gas costs of publishing Layer 2 data to the Ethereum mainnet by realizing temporary storage and access of off-chain data.
EIP-7516
Execution Layer
It is an opcode that returns the current basic fee for data blobs.
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 ephemeral storage, that is, 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 preceding upgrade before the Fusaka upgrade (specifically for implementing the Verkle transition). Since Ethereum developers unanimously believe that no other substantive changes should be combined with Verkle, the Pectra upgrade is a series of other changes prior to 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 realizing a 'stateless client'.
The initial plan for the Pectra upgrade is to activate it on the mainnet in early 2025. Among these, a key point is the account abstraction EIP-7702, which 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 introduces a smart contract called EntryPoint to allow smart contracts to behave like user accounts), EIP-3074 requires implementing an Ethereum hard fork to realize account abstraction. It mainly extends smart account functionality to EOAs by introducing two opcodes—AUTH and AUTHCALL.
EIP-7702 is a further step beyond EIP-3074. Unlike the opcode implementation of smart account mode for EOAs in EIP-3074, with EIP-7702, EOAs can now store an address called 'Delegation Indicator' that points to a smart contract. When a transaction is sent to an EOA, it can execute the code at this designated address as if executing its own code, similar to the 'delegate call' functionality 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.
As the Pectra upgrade shifts its focus to 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 thereafter.
So far, other code changes related to Pectra mainly focus on enhancing the experience for users and smart contract developers. A more detailed introduction to the Pectra upgrade can be referenced in this article.
Other EIPs
Not all reviewed EIPs need to wait for a hard fork upgrade to start being used. Ethereum has also passed 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 depend more on community recognition of the EIP, i.e., whether the community is willing to accept or actively implement it. Some EIPs that need to wait for hard fork upgrades also require acceptance from users, DApps, etc., to achieve widespread adoption.
Interoperability: Cross-chain/Rollup Standards
As Ethereum's Rollup-centered roadmap and the growing variety of Layer 1s evolve, on-chain liquidity fragmentation and one of the biggest advantages of on-chain composability are gradually lost due to the fragmented situation.
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, there are many protocols capable of addressing the first gradient issue. Protocols like Across have greatly improved cross-chain speeds and also have low fees. Due to their intent-based architecture, user cross-chain security issues have been fully transferred to the solver. Currently, some proposals related to cross-chain/Rollup primarily focus on resolving initial standard issues.
The synchronization 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 proposed jointly by Across and Uniswap. Through this standard, all intent interoperable orders can 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 connect; EIP-3370 adds identification tags to blockchain addresses, clarifying which specific blockchain network an address belongs to, avoiding users sending funds to the wrong network; ERC-3668 CCIP Read effectively completes off-chain verification, providing a secure mechanism to access off-chain data without additional trust assumptions, effectively automatically supporting lightweight clients compatible with L2 blockchains without requiring any extra configurations from wallets.
RIP-7755 (L2 calling standard)
RIP-7755 is an L2 calling standard. This POC was launched 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 applies to blockchains compliant with the EIP-4788 standard, which can currently verify the state of OP Stack chains and Arbitrum.
Summary
The above is an overall review of the major events Ethereum experienced in 2024. Of course, Ethereum's journey in 2024 is far from over. It also includes the competition with Solana, criticisms of unclear positioning and centralization, major institutions beginning to hold Ethereum spot ETFs (Michigan pension funds disclosed holdings of over $10 million in Ethereum spot ETFs), major institutions launching tokenized products on Ethereum (UBS launched a tokenized money market fund uMINT based on Ethereum in Singapore, and Wall Street giant Guggenheim tokenized $20 million in commercial paper on Ethereum), and after facing a crisis, Vitalik Buterin published six articles about the Ethereum roadmap and answered AMA questions on Ethereum research Reddit, etc...
And ultimately, everything points to a pending question: what lies ahead in the future?
