The Cancun upgrade will make Layer2 10X — 100X faster and cheaper!
While the previous Shanghai-Shapella upgrade enabled ETH to be withdrawn from staking, the Cancun upgrade is specifically aimed at lowering transaction fees. In 2023-2024, the focus will be on improving the scalability of the network.
The upcoming network upgrade, scheduled for Fall 2023, will take a similar approach to the April protocol change, with implementation planned for the smart contract execution layer (Cancun) and the PoS consensus layer (Deneb).
The main new feature of this upgrade is the introduction of a new transaction type called EIP-4844, also known as proto-thank-sharding, as described in the technical documentation. This aims to further fragment the network by temporarily storing and restoring previously deleted data. If successfully activated, transaction costs on the Optimism and Arbitrum networks are expected to be cut in half compared to current fees.
EIP-4844 is the first step in the expansion of Ethereum, and its importance and influence are no less than the Shanghai upgrade. Therefore, in the next upgrade of Ethereum Cancun, EIP-4844 will be promoted as the main task as soon as possible, and the completion time is expected to be in the second half of the year.
It is expected that after the full implementation of IP-4844, the transaction cost of L2 Rollups will be reduced by an order of magnitude, even lower than $0.001, which will be a real explosion of L2 Rollups. For Ethereum, EIP-4844 is only the first step of a complete sharding expansion plan. The implementation of the first step can already significantly reduce the gas cost, which will make the entire ecology more confident. I believe that Ethereum will be better than Ethereum. more competitive and promising. other public chains.
How will these benefits be realized?
According to the developers, the main goal of EIP-4844 is to increase the scalability of Ethereum beyond the current capabilities of Layer 2 solutions, while reducing gas costs is seen as a secondary benefit. This will be achieved through the introduction of Binary Large Object (BLOB) transactions. It provides cheap storage costs by moving transaction data to new temporary “blob” storage in a manner similar to plugin dataspaces. Blobs are stored in the nodes of the consensus layer, rather than directly uploaded to the main chain execution layer like Calldata. At the same time, blobs do not require permanent storage. They are removed from Ethereum once they are no longer needed, so it is also cheaper.
Blobs, although introduced by EIP-4844, will also be fully compatible with the format used in final sharding. In EIP-4844, each Rollup transaction has a maximum of 2 blobs pending, and each block contains 8 blobs to 16 blobs, about 1MB to 2MB. In the full sharding scenario, the blob can be further expanded to 16MB to 32MB, but only if the proposer-builder separation and data availability sampling are completed.
Which opportunities deserve attention?
The following are some projects and public chains related to the Cancun upgrade that we have compiled for your reference.
1. The best in the Layer 2 line
Rollup and Danksharding are the only trustless scaling solutions for Ethereum in the short and medium term, and possibly even in the long term. Obviously, this is perfectly fine for a Layer2 Rollup of the entire track. Projects to watch: Layer2 Arbitrum and Optimism are the leaders in the Layer2 circuit, and if L2 is hot again, these two tokens will definitely benefit the most.
2. Undervalued projects
Metis and Boba Network are projects modeled after Optimism. Their Token prices have fallen for a year, and the buying price may be relatively low now. They are in the medium risk category with high return potential.
Metis is built on the basis of OptimisticRollup technology, which gives its advantages of the technical standard itself – low gas fee and extremely high processing speed. Not only that, Metis has also made technical improvements to improve the latency of pulling assets from Optimistic Rollup Layer 2 to Layer 1.
Boba Network is an L2 Ethereum scaling and enhancement solution built by the Enya team as a core contributor to the OMG Foundation. The predecessor of Boba Network is OMGX Network. OMGX Network is one of the first Ethereum expansion projects to propose the Layer 2 concept, focusing on payment positioning and Plasma-based expansion solutions.
3. ZK-Rollups
zkSync, StarkNet, and Scroll are three of the most well-known projects in the ZK-Rollup space. None of them have issued tokens yet, but if they did, they would be as important as $ARB and $OP, if not better, as the industry sees zkRollup as a more advanced solution.
zkSync is an extension solution based on the ZK-Rollup architecture developed by Matter Labs. The 1.0 main network mainly for payment purposes and the general 2.0 test network fully compatible with EVM. In zkSync 2.0, the L2 state is divided into ZK-Rollup where on-chain data is available and zkPorter where off-chain data is available, both of which are composable and interoperable. This month, zkSync also upgraded the 2.0 entry, which supports the use of any token to pay network fees, which greatly improves the flexibility of users.
Starknet is a decentralized Validity-Rollup (commonly known as ZK-Rollup). It runs on Ethereum as a second-layer network, enabling any application to scale massively without compromising the composability and security of Ethereum.
Scroll is zkRollup based on zkEVM on Ethereum, as a Layer 2 solution to solve the congestion problem of Ethereum. Founded in 2021, Scroll is committed to creating an EVM (Ethereum Virtual Machine) equivalent ZK-Rollup for better compatibility.
Taiko is a ZK-Rollup solution built on Ethereum by the founders of Loopring. Taiko launched the ZK-EVM alpha-2 testnet “Askja” on March 23. On April 17th, Taiko will deprecate the alpha-2 testnet and simultaneously launch the alpha-3 testnet to implement work on fixes, improvements, and new components. At present, it has received investment from many well-known institutions.
4. Cross-chain
Layer 2 is essentially a multi-chain operation, so we are also optimistic about cross-chain protocols.
Layerzero is currently the hottest cross-chain protocol. It is a cross-chain communication protocol that can transfer “information” on one chain to another chain, and realize decentralized information cross-chain services by deploying a series of smart contracts (Endpoints) on the chain. chain, chain. The ultra-light node runs on Endpoint, and the “ultra-light” fonts now only provide the Block header of the specified block. During the transmission process, Oracle and Relayer ensure the validity and security of information transmission.
5. Data Availability
Since blob data can only be saved for a short period of time, there is a problem with the call of historical data. Then there will be a development channel for a new decentralized storage protocol. At the same time, the Layer 2 scaling solution also needs to use the data availability layer.
Celestia is a data availability layer project. Based on the Cosmos architecture, it provides data layer and consensus layer for other Layer1 and Layer2, builds a modular blockchain, has a toB business model, and charges for other public chains. The principle is the same as the Ethereum sharding scheme, which can reduce Rollup’s current transaction fee bottleneck “data storage cost” to a certain extent.
