Never have I ever seen so much anti-Ethereum propaganda on my Twitter timeline.
Every other day, there’s a new Layer 1 that is doubted as the “Ethereum killer”, but Ethereum doesn’t know it, so it remains undeterred, focusing on its growth and improvement.
This commitment to progress is evident in the recently unveiled Ethereum roadmap for 2024, spotlighting key developments that promise to enhance scalability and user experience.
Among those, finally, a date was set for EIP-4844, which will make it much easier for Layer 2 to publish data on Ethereum.
While competition becomes fierce, these new ERC and EIP are set to greatly improve Ethereum's scalability and user experience.
Let's dive into these exciting updates, including ERC-4337, EIP-4844, EIP-3074, and EIP-5003.
ERC-4337: Revolutionizing Smart Contract Wallets
The introduction of the ERC-4337 standard is a significant leap in the evolution of smart contract wallets.
This improvement introduces a novel concept called "account abstraction."
ERC-4337 is an Account Abstraction proposal that completely avoids the need for consensus-layer protocol changes. Instead of adding new protocol features and changing the bottom-layer transaction type, this proposal introduces a higher-layer pseudo-transaction object called a UserOperation.
More on ERC-4337: https://twitter.com/johnrising_/status/1629470535397539840
Traditionally, Ethereum accounts are separated into externally owned accounts (EOAs) and smart contract accounts. However, user-operated EOAs often pose challenges in terms of usability and security.
ERC-4337 blurs these lines, allowing users to interact with smart contracts more intuitively.
The way users interact with Ethereum needs to step up to the enhanced complexity of the landscape. We have already seen the emergence of Account abstraction-based solutions, such as Creso Wallet and Avocado Wallet.
The introduction of ERC-4337 will pose the foundation for a series of improvements to wallet designs, as well as reduced complexity for end users.
Among other things, ERC-4337 greatly improves the end-user experience as well as enables new possibilities such as gasless transactions or social logins and password recovery.
Key Features of ERC-4337 Include:
- Enhanced Security: By integrating more complex logic into wallets, users can set conditions for transactions, like multi-factor authentication or daily spending limits.
- User-Friendly: It simplifies interactions for non-technical users, making the Ethereum ecosystem more accessible.
- Gas Fee Payments in Tokens: Users could potentially pay transaction fees in tokens other than ETH, adding a layer of convenience.
EIP-4844: Boosting Layer 2 Efficiency
Why EIP-4844: To create a cheap place for L2 solutions to post data on Ethereum and reduce overall transaction fees users pay on L2 by a lot.
Problem: L2s produce an increasing amount of data. If there’s a way to post that data cheaply, this will immediately reduce how much the networks charge users to transact.
Solution: New transaction format for “blob-carrying transactions”. It contains a large amount of data that “cannot be accessed by EVM execution, but whose commitment can be accessed.” Instead of embedding the full contents in the body, the contents of the blobs are propagated separately, as a “sidecar.”
EIP-4844, often referred to as "proto-danksharding" is a significant stride towards solving Ethereum's scalability issues. It introduces a new transaction type that allows "shard blobs" – temporary data that can be used by Layer 2 solutions like rollups.
EIP-4844 introduces a new kind of transaction type to Ethereum which accepts "blobs" of data to be persisted in the beacon node for a short period.
Instead of containing transactions being executed in the Ethereum blocks, shard blocks would just contain “blobs of data” and would be the responsibility of L2 to use that data space to create a secure and more scalable experience for their users.
What is important about EIP-4844 is that its value will trickle down to users, as we will all be able to benefit from lower L2 fees.
Why Will L2s Fees Be Lower?
EIP-4844 separates fees for transaction computation and storage.
L2 will use a different function to submit “blobs” to Ethereum.
Instead of using “CALLDATA”, which stores data forever, they would use blobs, which are pruned after a pre-defined period.
The blobs of data don’t have to be available forever, but for a certain period (e.g., 1-3 months), long enough to allow L2s to ensure at least 1 honest actor to reconstruct the state and challenge or replace the bad sequencer. The data gets then pruned.
EIP-4844 provides significant scaling relief for rollups by allowing them to initially scale to 0.25 MB per slot, with a separate fee market for blobs allowing fees to be very low.
Read: transactions will be 10x cheaper.
The Potential Impacts of EIP-4844 Include
- Reduced Costs for Layer 2: By lowering the data costs, it makes Layer 2 solutions more economical, encouraging broader adoption.
- Increased Transaction Throughput: This can lead to a more scalable network, capable of handling more transactions per second.
- Enhanced User Experience: With faster and cheaper transactions, the overall user experience on Ethereum improves dramatically.
I wrote an extensive article on this a while ago:
https://fraxcesco.substack.com/p/all-ethereum-l2s-fees-are-about-to?embedable=true
EIP-3074: Streamlining Transactions
The EIP-3074 is a new primitive, that will open the doors for more seamless UX on Ethereum, without the need for additional trust assumptions.
EIP-3074 introduces a fundamental change in how Ethereum transactions are authorized and executed. The proposal allows a user to authorize a third party to execute transactions on their behalf, using a new type of operation.
EIP-3074 aims to update Ethereum’s EOAs so they can delegate control to smart contracts — allowing smart contracts to approve transactions originating from user accounts.
In practice, EIP-3074 would allow the execution of complex operations with a single signature, with no need for multiple approvals, greatly improving the UX as well as allowing the execution of complex operations seamlessly.
End users will be able to send batched transactions, expiring transactions, and more.
More on EIP-3074: https://twitter.com/lightclients/status/1371911245561917441
However, for this to work, the Ethereum protocol would need to be modified, with two new EVM “opcodes”: AUTH and AUTHCALL.
For this reason, EIP-3074 is usually viewed less favorably compared to other Account Abstraction proposals, such as EIP-4337.
Read more on the concerns about this EIP:
https://twitter.com/scupytrooples/status/1418441829314220032
Nonetheless, EIP-3074 would introduce new use cases, such as:
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Smart Contract wallets: with wallet recovery solutions you will never lose your funds again.
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Batch Transactions: saving on gas costs.
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Automations: automate transactions thanks to smart contract accounts.
The Benefits of EIP-3074 Include:
- Simplified User Interactions: Especially beneficial for complex DApp interactions, reducing the steps and gas costs for users.
- Increased Flexibility for Developers: This allows for more creative and efficient smart contract designs.
- Potential Security Enhancements: Though it introduces new security considerations, it also offers the opportunity for more robust security mechanisms.
EIP-5003: Network Resource Optimization
This proposal combines very well with EIP-3074, which provides the “opcodes” to delegate EAOs signing authority to a smart contract.
While EIP-3074 authorizes smart contracts, EIP-5003 completely migrates the signing key of Ethereum EOAs accounts to smart contract accounts.
A limited application of only EIP-3074 would create new vectors of attacks around the authority delegation to smart contracts.
While EIP-5003 is less publicized, it plays a crucial role in enhancing the Ethereum network's efficiency and security.
The Expected Advantages of EIP-5003 Are:
- Improved Security: This EIP combines with EIP-3074 to solve its shortcomings and ensure there are no new vectors of attack from the Account Abstraction’s migration.
- Migration away from EOAs: This EIP is the final migration away from EOAs.
Conclusion: A Future-Proof Ethereum
While its development is often considered to be slow and controlled to prioritize security, Ethereum does not stay idle, and it would be incorrect to observe and assess its technology only according to what it looks like at every specific moment in time, for it is always evolving and improving.
In particular, Ethereum's 2024 roadmap illustrates a clear vision for the future, and a commitment to addressing critical areas like scalability, security, accessibility, and usability and making sure the network remains future-proof.
A strong focus is placed on redefining how users interact with Ethereum, shifting from EOA accounts to more flexible smart contract wallets.
The implementation of ERC-4337, EIP-4844, EIP-3074, and EIP-5003, each plays a pivotal role in this evolutionary journey:
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ERC-4337 revolutionizes smart contract wallets through account abstraction, offering enhanced security and user-friendliness. This standard is poised to significantly simplify the user experience and broaden accessibility to the Ethereum ecosystem.
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EIP-4844, or "proto-danksharding" is a breakthrough in reducing costs and enhancing the efficiency of Layer 2 solutions. By introducing a new transaction format for blob-carrying transactions, it promises to lower transaction fees and increase throughput, benefiting the end users with more affordable and faster transactions.
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EIP-3074 and EIP-5003 together represent a significant step in streamlining transactions and optimizing network resources. While EIP-3074 introduces new operational capabilities for authorizing transactions, EIP-5003 complements it by transitioning signing authority from Externally Owned Accounts (EOAs) to smart contract accounts, bolstering network security and efficiency.
As Ethereum continues to innovate and improve, it will continue to fight for its relevance in the face of heightened competition.
The main purpose of this piece is to incentivize readers to look at Ethereum not as a static network but as a network in constant development and evolution, actively working to become future-proof against emerging technologies and alternatives.
We’ll continue monitoring the implementation of EIP and how Ethereum will evolve over the year.
The author of this post is not associated with the projects mentioned in this article in any way. All of the content above is not financial advice, and you are always encouraged to do your own research.
Also published here