Is EIP-4844 the game-changer Ethereum Rollups have been waiting for?

Ethereum Improvement Proposal (EIP-4844) introduces significant enhancements for Ethereum rollups, marking a pivotal advancement in Ethereum’s scalability and efficiency. Rollups, a layer 2 scaling solution, leverage Ethereum’s security while processing transactions off-chain, thereby alleviating network congestion and reducing gas fees. 

EIP-4844 introduces a novel transaction type that enables the storage of “blobs” of data in Ethereum’s beacon node for a limited duration, enhancing the capabilities of rollups. This upgrade, known as proto-danksharding, facilitates the addition of more economical data to Ethereum, thereby reducing transaction costs and enhancing scalability. 

By introducing proto-danksharding, EIP-4844 serves as an interim solution before the full implementation of data sharding, marking a significant stride toward Ethereum’s scalability objectives 

EIP-4844 could revolutionize Ethereum rollups forever

The Dencun hard fork, which is expected to take place in March 2024, will see several Ethereum Improvement Proposals (EIPs) go live on the Ethereum mainnet. EIP-4844, commonly known as proto-danksharding, has sparked considerable attention.

In today’s Ethereum ecosystem, layer-2 scaling solutions such as rollups are critical for increasing transaction throughput and lowering costs. These rollups “inherit” security from Ethereum by requiring execution layer nodes to keep a temporary replica of the network’s ledger and history. This technique enables the verification of transaction accuracy.

However, the current technique of accomplishing this – writing data as “calldata” — is excessively expensive, costing approximately $1000 per megabyte. This pricing mechanism presents considerable issues for layer-2 solutions, particularly during periods of strong demand, due to the large expenses involved.

Blob transactions will be introduced as an alternative to calldata in EIP 4844. These blob transactions are temporary data storage mechanisms intended to meet data availability requirements for Ethereum rollup solutions. Blobs are enormous data packets that can be handled and stored more efficiently than the existing system permits.

A rollup that is attempting to minimize cost and finality delay for their customers; developers believe they will post smaller blobs more frequently if the cost of blobs is minimal. If the price of blobs falls dramatically, rollups will consume more blobs, which will put upward pressure on prices.

According to one analyst, rollups must carefully examine how long they should wait before posting their data to Ethereum in batches.

Currently, on Arbitrum with calldata, the network collects approximately 100-120 kilobytes of data in a batch before uploading it to Ethereum. However, unlike calldata, which requires layer-2s to pay per byte, rollups must purchase the full blob, regardless of whether they use it.

Will Ethereum transactions be cheaper?

One of the key features of EIP-4844 is the reduction in costs associated with posting data to the Ethereum mainnet. Traditionally, rollups write their data to Ethereum as calldata, which incurs substantial fees, approximately around $1000 per megabyte. 

However, with EIP-4844, rollups can now submit transactions as “blobs,” potentially alleviating the costs of data posting. This reduction in costs opens up opportunities for more affordable transactions and broader adoption of Ethereum-based applications.

Blob pricing is built so that when usage is high, the price rises, and when usage is low, the price drops. This means that lowering transaction prices may increase demand for data posting and blob space, causing the price of blobs to rise again.

Shared posting is one potential method for lowering the cost of data posting. That is where two distinct rollups may decide to combine their data and publish it to the Ethereum mainnet.

If rollups were to share data posting in order to save money, one challenge they would have to address is figuring out how to split the costs.

Ethereum is not the only blockchain on which rollups can store their data. Data availability systems like Celestia and Eigenlayer are also attempting to address data posting difficulties via data availability sampling.

Each layer-2 solution can specify where they want to post their data. In the case of Arbitrum One and Arbitrum Nova, a DAO vote is presently underway to ensure that Arbitrum chains have the capacity to exploit EIP-4844 immediately following the Dencun update.