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Mensholong Lepcha is a financial journalist specializing in cryptocurrencies and global equity markets. He has worked for reputed firms such as Reuters and Capital.com. Fascinated…
Ethereum’s roadmap showcases a strategic plan to address crucial issues like high gas fees, security and privacy concerns, and centralization. Through a number of stages, it aims to implement rollup-centric scaling, enhance privacy, and simplify the protocol. By leveraging innovative solutions like L2 rollups and smart contract wallets, Ethereum strives to achieve global scalability and become a powerful decentralized world computer, enabling widespread adoption and revolutionizing various industries.
With ‘The Merge’ done and dusted, Ethereum (ETH) is preparing for its next big upgrade called ‘The Surge.’ The plan has been laid out to address the widely-discussed issue of high gas fees.
So, what is the Ethereum roadmap? In this article, we take a closer look at the blockchain’s future plans to solve its issues related to gas fees, security, privacy, and centralization.
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According to Ethereum co-founder Vitalik Buterin, Ethereum’s roadmap is split into a few stages.
Updated roadmap diagram! pic.twitter.com/MT9BKgYcJH
— vitalik.eth (@VitalikButerin) November 4, 2022
Ethereum is working to bring an open and permissionless experience to the myriad of decentralized applications (dApps) built on top of it. These applications range from crypto exchanges to digital collectible shops, real-life asset tokenization platforms, and data platforms.
Buterin has listed three major technical transitions that Ethereum needs to undergo to become a global phenomenon.
Ethereum’s strategy is to achieve global scale via roll-ups. A rollup is a layer-two (L2) chain that exists on top of a primary blockchain (L1). These rollups process transactions on the L2 chain, batch them together, and publish the bundled transactions on the L1 chain. The roll-up bundles transactions into groups so that gas fees do not have to be paid for each transaction.
Gas fees on Ethereum are notoriously high, often ranging from $3 to $4 during normal conditions. There have been instances where ETH gas fees skyrocketed to over $50. Such exorbitant fees pose a significant barrier to Ethereum’s mainstream adoption.
Wallets are the gateway to the crypto and Web3 worlds. However, the adoption of crypto wallets is handicapped by its cumbersome onboarding processes. The crypto industry is also associated with wallet hacks and thefts that have seen users lose thousands of dollars in cryptocurrencies and non-fungible tokens (NFTs).
The upcoming Ethereum upgrades will introduce smart contract wallets. Onboarding and account recovery is expected to become smoother. Transferring cryptos across different blockchain networks is expected to be easier.
Ethereum will continue to champion user privacy. The roadmap will see upgrades that will aim to ensure “privacy-preserving funds transfers.”
Buterin has hinted at a future where a user goes from having one address per chain to one address per transaction. However, this is still a work in progress due to the complexities involved.
Ethereum completed its long-awaited move from proof-of-work (PoW) to proof-of-stake (PoS) in 2022.
What did Ethereum achieve with The Merge?
In the first half of 2023, the Shanghai (aka Capella) upgrade went live. The upgrade enabled the withdrawal of staked ETH from the blockchain.
Staking is now less risky as the ETH tokens are not locked up and can be withdrawn at will.
Let’s focus on the most immediate step on the roadmap – The Surge – which will focus on scaling Ethereum by making gas fees cheaper.
Originally, sharding was seen as the way to scale Ethereum.
However, the updated roadmap states that the more efficient way to scale Ethereum is through L2 rollups. This is where EIP-4844 comes in.
EIP-4844 is also known as proto-Danksharding. The upcoming Ethereum upgrade will introduce a new way for rollups to add cheaper data to blocks.
It should be noted that L2 rollups like Optimism and Arbitrium have reduced gas fees on Ethereum. However, it is not rare to have gas fees above $1 per transaction on these rollups. Developers want to make gas fees on Ethereum rollups “as cheap as possible for users.”
Proto-Danksharding will introduce temporary data blobs to each block that will allow rollups to process transactions more cheaply.
As we know, rollups batch transactions off-chain and then post them on Ethereum in a compressed form to reduce the gas paid on each transaction. To prevent dishonest activities, rollup transaction data has to be available for honest actors to check whether the state of the transactions is correct. However, the history of transactions does not need to be available forever. It can be discarded after verification is complete.
Ethereum’s blog states:
The temporary data blobs that proto-Danksharding will introduce will store the history of roll-up transactions only for a fixed time period (1-3 months), after which it will be automatically deleted. A “prover” will have to challenge any dishonest transaction within this window.
Moreover, the data stored in the temporary data blobs will not be accessible by the Ethereum Virtual Machine (EVM). This means the EVM stores and processes less data resulting in lower gas fees.
According to Buterin, Ethereum will look to community projects to store the entire history of rollup transaction data.
Proto-Danksharding is only a stepping stone in order to reach the end game – Danksharding.
Think of Danksharding as proto-Danksharding on steroids. The temporary data blobs will increase from one per block in proto-Danksharding to 64 per block in Danksharding.
However, to get to this stage, there are several upgrades that Ethereum has to implement. According to the Ethereum website, Danksharding is “several years away,” while proto-Danksharding “should arrive relatively soon.”
If we learned anything from The Merge is that Ethereum upgrades tend to take longer than expected to implement. This is because of the arduous testing and planning that developers run to ensure that upgrades are implemented as smoothly as possible. There are billions of dollars and millions of users at stake.
The road ahead is no different. There is no blueprint for most of these upgrades as it has never been done before. In a blog post about Ethereum’s roadmap, Buterin noted the path ahead as “challenging” and called for the need for “intense coordination.”
Listing L2 scaling, smart wallet transition, and privacy transition as Ethereum’s long-term goals, Buterin explained:
There is optimism and confidence within the Ethereum community. The “non-eventful” Merge in 2022 highlighted the efficiency of the work of Ethereum developers, given how smoothly Ethereum’s biggest upgrade to date went.
For now, we patiently await the day when Ethereum gas fees become cheap enough to compete with traditional finance.
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Mensholong Lepcha is a financial journalist specializing in cryptocurrencies and global equity markets. He has worked for reputed firms such as Reuters and Capital.com. Fascinated with blockchain technology, NFTs, and the contrarian school of investing, Mensholong has expertise in analyzing tokenomics, price movement, and technical details of Bitcoin, Ethereum, and other blockchain networks. He has also written articles on a wide range of financial topics including commodities, forex, central bank monetary policies, and other economic news.
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