2/ “The Merge”, Ethereum’s switch to a Proof of Stake network, is scheduled for mainnet by the end of September. The objective is to unlock blockchain accessibility at scale.
3/ Ethereum’s pivot from execution sharding to a rollup centric roadmap is a critical step towards scaling blockchains for the next billion users.
4/ As discussed in our previous research piece Modular Blockchains: A Deep Dive, data availability and sharding in modular architecture allows blockchains to scale throughput without sacrificing decentralization.
volt.capital/blog/modular-b…
volt.capital/blog/modular-b…
5/ A Rollup Centric Roadmap
Initially, the plan for Ethereum 2.0 (now abandoned terminology) was to achieve scalability by partitioning mainnet into 64 shards, each with separate miners/validators.
Initially, the plan for Ethereum 2.0 (now abandoned terminology) was to achieve scalability by partitioning mainnet into 64 shards, each with separate miners/validators.
6/ As a result of the rise and adoption of rollups combined with the complexity of implementing execution sharding, the original scalability roadmap centered around execution sharding has been abandoned in favor of data sharding.
7/ Since the Ethereum team now believes that scaling Ethereum to world demand will happen through rollups, the plan for Ethereum post-merge is to become a robust settlement and data availability layer from which rollups derive security from.
8/ The Beacon Chain (The Merge)
Contrary to popular belief, the Merge is not intended to reduce transaction costs, but rather to transform Ethereum into a powerful underlying infrastructure layer for rollups.
Contrary to popular belief, the Merge is not intended to reduce transaction costs, but rather to transform Ethereum into a powerful underlying infrastructure layer for rollups.
9/ The first core step towards this goal is the Beacon Chain. This transforms Ethereum from its previous Proof of Work system to a Proof of Stake system, where stakers must post collateral in order to produce blocks, with dishonest actors having their collateral slashed.
10/ Moving the consensus system to Proof of Stake introduces validation committees as a primitive, which in turn strengthens network consensus and paves the way for an efficient in-protocol data availability layer.
11/ Groups of validators, committees, are a key innovation provided by the Beacon Chain. Committees are randomly assigned by the Beacon Chain to vote on blocks and form consensus.
12/ A committee’s aggregated vote is known as an attestation, allowing the state of the Beacon Chain to be easily verified through checking the vote of a committee, minimizing block size and data growth compared to verification through singular validators.
13/ Attestation committees also strengthen consensus as a relatively large number of validators are needed in order to collude to create a fork. The validator set is also shuffled periodically, making it difficult for malicious validators to collude in time for an attack.
14/ Consensus & MEV (The Splurge)
Vitalik reasons that the Endgame of all blockchains is to have centralized block production and decentralized block verification.
Vitalik reasons that the Endgame of all blockchains is to have centralized block production and decentralized block verification.
15/ Since post-sharded Ethereum blocks are extremely data dense, centralization of block production is necessary due to the high data availability requirements. At the same time, there must be a way to maintain a decentralized validator set.
16/ After the merge, Ethereum will implement Proposal-Builder Separation for the consensus layer. The new builder role constructs Ethereum blocks, and submits it along with a bid for proposers (a randomly selected subset of the validator set) to accept.
17/ Since payloads sent to proposers are stripped of transaction content, this eliminates the possibility of frontrunning by validators.
18/ Additionally, in an efficient market, the introduction of a blockspace market also incentivizes builders to bid up to the full value of the MEV extracted, allowing the decentralized validator set to reap a majority of MEV rewards.
19/ Danksharding (The Surge)
While Proposal-Builder Separation was initially designed to counteract the harmful externalities and centralizing forces of MEV, the Ethereum core team realized that it could also serve the purposes of data sharding.
While Proposal-Builder Separation was initially designed to counteract the harmful externalities and centralizing forces of MEV, the Ethereum core team realized that it could also serve the purposes of data sharding.
20/ The main innovation of Danksharding, named after core contributor Dankrad Feist, is a merged fee market - instead of a fixed number of shards with distinct blocks and proposers, one proposer selects all transactions and data for each specific slot.
21/ The proposer, a randomly chosen committee of validators, subsequently performs data availability sampling on blockchain data.
22/ This ensures a decentralized way of maintaining data availability for light clients, which is not possible with single-validation due to the excessive data size of blocks post-merge.
23/ Since consensus nodes are also performing data availability sampling, this model unifies the settlement, consensus, and data availability layer.
24/ A unified settlement and data availability layer unlocks exciting capabilities for rollups utilizing validity proofs: ZK rollups will now be able to make synchronous calls with the execution layer on Ethereum.
25/ This augments and enhances L2 primitives like distributed liquidity and fractal scaling, setting the stage for innovative next-gen dapps to be built on ZK rollups.
26/ Proto-danksharding
Despite its promising consequences for the future of Ethereum, danksharding will not immediately be available in its full capacity after the merge.
Despite its promising consequences for the future of Ethereum, danksharding will not immediately be available in its full capacity after the merge.
27/ Proto-dank sharding (EIP-4844) is a primitive version of danksharding scheduled to be released before the full implementation.
28/ This proposal creates a primitive called a blob-carrying transaction. As the name suggests, a blob-carrying transaction is a transaction which carries a data payload called a blob.
29/ Today, rollups use calldata to post transaction data back to Ethereum, resulting in high gas costs. In a sharded future, rollups will use blobs, saving users the gas fees associated with EVM execution.
30/ History & State (The Verge & The Purge)
Ethereum state and its storage is also a consideration. An ever-increasing state can potentially affect decentralization, as validators must be able to accomplish their task on consumer hardware.
Ethereum state and its storage is also a consideration. An ever-increasing state can potentially affect decentralization, as validators must be able to accomplish their task on consumer hardware.
31/ Proto-danksharding blobs are separate from the EVM execution layer, and are pruned after about a month. Additionally, EIP-4444 allows clients to prune and stop serving historical data on the peer-to-peer layer after about a year.
32/ Blockchain state is required to be stored on RAM or SSD. However, historical storage, data that Ethereum has already come to consensus on, can be stored on cheap HDDs.
33/ Takeaways (The Splurge cont.)
Danksharding supercharges rollups inheriting security from Ethereum.
Danksharding supercharges rollups inheriting security from Ethereum.
34/ Upgrading the underlying infrastructure by tightly coupling data availability with the consensus and settlement layer allow rollups to utilize native data availability solutions, forgoing the security assumptions of validiums and volitions.
35/ This paves the way for architectures like enshrined rollups, which eliminate governance and smart contract risk by allowing the deployment of entire rollups in-protocol.
36/ In-protocol rollups have several benefits: the fixed, per-block gas costs that smart contract rollups face today is eliminated, the need to re-execute transactions for validators to verify a block is removed as compute is decoupled from consensus.
37/ The main goal of Ethereum’s roadmap post-merge is to minimize trust assumptions and provide in-protocol scalability through implementing native solutions.
38/ The base layer of Ethereum is host to an entire ecosystem of decentralized applications promising a fundamental shift in the way we think about identity, storage, search, reputation, and privacy in the digital age.
39/ Upgrading Ethereum as a base layer also elevates this application layer, benefitting users and developers by providing a highly-secure, robust infrastructure to scale these use cases globally.
40/ Ethereum’s vision is a digital future on a global scale. The Merge is the first step in stewarding Ethereum towards this vision.
Read the entire article here 👇
volt.capital/blog/the-merge
volt.capital/blog/the-merge
Special thanks to @rauljordaneth (@prylabs), @sreeramkannan (@eigenlayer), and @ViktorBunin + @0xb17z (@CoinbaseCloud) for reviewing and providing feedback!
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