EIP4844: L2 transaction fee reduction foreseeable depression effect coming soon

Ever since the Ethereum core developers laid out Ethereum’s roadmap around Rollups, it’s clear that Rollups will play a central role in Ethereum’s future. However, before the long-promised data sharding (or Danksharding) can be realized, Ethereum needs to reduce transaction fees as soon as possible, or it will risk continuing to lose new users to other L1s.

Leading Rollup teams have come up with their own solutions to reduce transaction fees and increase the developer experience on their respective L2. These include the Optimism team and the Arbitrum team, which optimize transaction compression techniques. Arbitrum has launched their next biggest upgrade, Arbitrum Nitro, which will compile Arbitrum Fraud Proof into WASM, which will greatly improve the developer experience on Arbitrum L2 and also reduce latency.

However, if we look at the unit cost of L2 transactions, we see that the largest piece is “Call Data”. Call data is critical to the L2 security mechanism. Basically, in the presence of malicious validator activity on L2s, the entire L2 chain can be rebuilt by using Call Data published on L1s. However, publishing call data on L1 is expensive and currently accounts for over 80% of L2 transaction fees.

So how to solve this problem? Fundamentally, more space needs to be created for data on L1, thereby reducing L2 transaction fees. Data sharding (DankSharding) will help build a huge data space on Ethereum L1, however, to fully implement Danksharding on Ethereum is expected to take quite a long time (about 18 months if all goes well). 

This is why the Ethereum core developers and the Rollup team started to propose differently, to build an instant data space on L1 and make Rollup instantly price competitive in the L1 market. EIP-4844 is the result of these efforts and is expected to reduce Rollup fees by orders of magnitude.

In our previous article, we explored Ethereum’s new sharding design, DankSharding, which has some significant simplifications compared to the previous design. EIP-4844, also known as proto-danksharding, basically implements most of the logic of the data sharding specification in preparation for Danksharding.

So how is this done?

Rather than providing more space for transactions on the L1 block, Danksharding is more about providing more space for the data itself (the blob of transaction data). This data blob needs to be network accessible. Rollups will utilize the space in these data blobs and store compressed transaction data in them. A transaction that carries a blob is a normal transaction with an extra block of data (called a blob). Compared with the more expensive call data, the data size of Blob is huge, which can provide more data space for L2.

What are the advantages of EIP-4844?

  • The biggest benefit of EIP-4844 is that it reduces L2 transaction fees by an order of magnitude, making it more competitive with other L1s. Pseudotheos believes that it is possible to bring the fees of Optimistic Rollups to less than $0.01, bringing transaction fees to less than 100 times current levels.

EIP4844: L2 transaction fee reduction foreseeable depression effect coming soon

Source: Pseudotheos argues(https://twitter.com/pseudotheos/status/1504457560396468231/photo/1)

  • Another advantage of EIP-4844 is that it provides a good soil for future applications of Danksharding to easily implement data sharding in the future. A specific example is that EIP-4844 can be compatible with future changes in the consensus layer, helping L2 developers to get rid of the trouble of needing to upgrade.

  • It also introduces a multi-dimensional fee market for Ethereum L1, which separates the usage and fees of different resource types, such as the application of EVM, block data, witness data, and state size. And all these resources have different capacity limits, which means if each resource has a different pricing mechanism, they will be allocated in an efficient way. However, Ethereum L1 currently uses a single metric to measure the cost of using all these resources, the gas fee, which is very inefficient.

    • Proto-danksharding introduces a multi-dimensional EIP-1559 fee market with two resources, gas fees and blobs, with independent floating gas prices and limits.

    • That is, there are two variables and four constants:

EIP4844: L2 transaction fee reduction foreseeable depression effect coming soon

What are the disadvantages of EIP-4844?

  • Since all validators and clients of Ethereum L1 need to download the full blob content, this increases the cost of running such nodes and may raise the bar for running such nodes. However, in combination with some other recommendations such as EIP-4444, it is possible to require nodes/clients to store these data blobs only for a certain period of time (1-3 months).

EIP4844: L2 transaction fee reduction foreseeable depression effect coming soon

Source: https://www.eip4844.com

What’s next for EIP-4844?

Although the main structure of EIP-4844 has been clarified, there are still some aspects that are being explored. It goes without saying that the Ethereum core team is currently preoccupied with the upcoming merger, which is expected to happen sometime in Q3. The core developers mentioned that EIP-4844 is expected to be implemented around 6 months after the merger, i.e. sometime in Q1-Q2 of 2023.

Danksharding + EIP-4844 all make it clear that the future roadmap of Ethereum L1 is to become Rollups of data availability + security layer. Danksharding is expected to be implemented in the next 18-24 months, while EIP-4844 itself will be implemented in 6-9 months.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/eip4844-l2-transaction-fee-reduction-foreseeable-depression-effect-coming-soon/
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