Akif CUBUK/Shutterstock modified by Blockworks
Today, enjoy the 0xResearch newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. Subscribe to the 0xResearch newsletter.
Where does Ethereum go next?
BTC is $68k and ETH is $2.7k today. The last time bitcoin was at this price point was in November 2021, when ETH was ranging around $4.3K.
Back then, Ethereum’s prohibitively expensive gas fees averaged 130 gwei (27 gwei today). That prompted public declarations to “abandon” Ethereum for the alt-L1 chains then — remember “FOAN”?
You could easily count every active rollup in those days. Today, there are at least 105 rollups scaling a cumulative total of about 296 transactions per second, according to L2Beat.
The Ethereum L1 has a TPS of about 13, so that’s about a 21x improvement from three years ago. All things considered, that’s progress.
This progress is largely thanks to the proliferation of rollups via rollup-as-a-service (RaaS) providers, like Caldera and Conduit, which makes it really easy and cheap to create them.
The second major factor is the rise of alternative data availability solutions like Celestia, as well as the EIP-4844 Dencun upgrade in March 2024. The latter offered L2s rollups a cheaper way to post their batched data to the L1 — about 10x cheaper in cost savings.
This is all going according to plan. But it’s still a long way from Ethereum’s endgame, which is to reach about 100k TPS on both the Ethereum mainnet and all L2s as part of the roadmap’s “Surge” phase.
For that to happen, much remains to be accomplished.
For one, Ethereum needs PeerDAS (peer data availability sampling) to scale data availability. PeerDAS borrows some important ideas from BitTorrent’s peer-to-peer file sharing by distributing broken pieces of data between Ethereum validator nodes to handle more data without the burden of having to store everything.
Then there’s data compression to make more compact the millions of daily signatures on transactions we sign via our MetaMask wallets, such that data usage of an ERC-20 transfer would cost no more than 30 bytes (180 bytes today).
This can be achieved by aggregating several signatures into one that verifies against multiple public keys at once, using the BLS (Boneh-Lynn-Shacham) digital signature scheme — not currently possible on ECDSA (Elliptic Curve Digital Signature Algorithm) signatures today.
Next is the use of plasma, a scaling solution wherein blocks are published off-chain with Merkle roots of those blocks placed onchain — a vast computational improvement over today’s rollups, where full blocks are submitted onchain, or via validiums.
That’s just for the L2s. As for the L1, execution needs to continue scaling, either by increasing gas limits of L1 blocks or introducing piecemeal upgrades to make the EVM more gas-efficient. Methods look to adapting the EVM Object Format (EOF) bytecode, or creating parallelized markets for computation, data and storage (i.e., multidimensional gas pricing).
All this ensures the L1 does not become a “ghost chain” used only for settlement and DA. In Vitalik’s words, Ethereum still “needs to be powerful enough to be able to at least occasionally actually handle a highly complex and chaotic wind-down of an L2,” which is why the “long-run security of the network” matters.
Finally there are UX improvements like solving cross-chain interoperability, so using Ethereum doesn’t feel like using 100 different chains. This effort is being tackled at the protocol level by developing better ERC standards like ERC-7683, and by having dozens of other players working in the “shared sequencing” and “chain abstraction” areas.
All these roadmap features must be accomplished while preserving decentralization, which entails pushing L2s toward active proof systems that are trustless — and keeping an eye on centralization around the MEV layer.
Chart of the Day
Memecoin frenzy on Solana:
Source: Blockworks Research
Memecoin trading volumes (light and dark purple bars) are racking up new all-time highs relative to total DEX trading activity on Solana. In the last week, about $15.4 million in trading volumes came from memecoin trading, against a total of $19.8 million on all DEX activity. The pump.fun memecoin maker saw 31,615 memecoins deployed on past Saturday alone, marking its highest ever.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
