Upcoming Ethereum Cancun upgrade: What opportunities are worth your attention?

The Cancun upgrade marks a new milestone in the development of the Ethereum blockchain. The team has already begun work on this anticipated update. So, what can we expect from the network once Cancun-Deneb goes live? What opportunities are worth paying attention to?

The Cancun upgrade will make Layer2 10X – 100X faster and cheaper!

While the previous Shanghai-Shapella upgrade allowed ETH to be withdrawn from staking, the Cancun upgrade is specifically aimed at reducing transaction costs. The focus in 2023-2024 will be on increasing the network’s scalability.

The upcoming network upgrade, planned for the fall of 2023, will implement a similar approach to the April protocol change, focusing on the smart contract execution layer (Cancun) and 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 is aimed at further segmenting 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 reduced by half compared to current fees.

EIP-4844 is the first step in Ethereum’s scalability journey, and its importance and impact are no less than that of the Shanghai upgrade. Therefore, in the next upgrade of Ethereum Cancun, EIP-4844 will be pushed as a major task as soon as possible, with completion expected in the second half of the year.

Once IP-4844 is fully implemented, L2 Rollups transaction costs are expected to drop by an order of magnitude, even below $0.001, which will be the real outbreak of L2 Rollups. For Ethereum, EIP-4844 is only the first step of the complete sharding expansion plan. The implementation of the first step can significantly reduce gas costs, which will make the entire ecosystem more confident, and believe that Ethereum will be more competitive and promising than other public chains.

How will these benefits be realized?

According to developers, the main goal of EIP-4844 is to improve Ethereum’s scalability, surpassing the current capabilities of Layer 2 solutions, while reducing gas fees is considered a secondary benefit. This will be achieved by introducing binary large object (BLOB) transactions. By moving transaction data to a new temporary “Blob” storage in a way similar to plug-in data space, it provides cheap storage costs. Blob storage is in the nodes of the consensus layer, rather than being uploaded directly to the main chain execution layer like Calldata. At the same time, Blob does not need to be permanently stored. Once they are no longer needed, they will be removed from Ethereum, making it cheaper.

Although introduced by EIP-4844, Blob will also be fully compatible with the format used in the final shard. In EIP-4844, each Rollup transaction can suspend up to 2 Blobs, and each block contains 8 to 16 Blobs, approximately 1MB to 2MB. In the full-shard scenario, Blob can be further extended to 16MB to 32MB, provided that proposer-builder separation and data availability sampling are completed.

What opportunities are worth paying attention to?

The following are some projects and public chains related to the KanKun upgrade that we have compiled for your reference.

1. The leader on Layer2

Rollup and Danksharding are the only trustless expansion solutions for Ethereum in the short and medium term, and even possibly in the long term. Obviously, this is completely good for the entire Layer2 Rollup orbit. Projects that need attention include: Layer2 Arbitrum and Optimism are the leaders in Layer2 circuits. If L2 becomes popular again, these two tokens will definitely benefit the most.

2. Underestimated projects

Metis and Boba Network are projects that imitate Optimism. Their token prices have fallen for a year and the current buying price may be relatively low. They belong to the medium-risk category with high return potential.

Metis is built on the OptimisticRollup technology, which gives it the advantages of the technical standard itself-low gas fees and extremely high processing speed. Moreover, Metis has also made technical improvements to improve the delay of extracting assets from Optimistic Rollup Layer 2 to Layer 1.

Boba Network is an L2 Ethereum expansion and enhancement solution built by the Enya team as a core contributor to the OMG Foundation. Boba Network’s predecessor is OMGX Network. OMGX Network is one of the earliest Ethereum expansion projects that proposed the concept of Layer 2, focusing on payment positioning and Plasma-based expansion solutions.

3. ZK-Rollups

zkSync, StarkNet, and Scroll are the three most well-known projects in the ZK-Rollup field. They have not yet issued tokens, but if they issue tokens, they will be as important as $ARB and $OP, or even better, because the industry believes that zkRollup is a more advanced solution.

zkSync is an extension solution based on the ZK-Rollup architecture developed by Matter Labs. It is mainly aimed at the 1.0 mainnet for payment purposes and the 2.0 testnet that is fully compatible with EVM. In zkSync 2.0, the L2 state is divided into ZK-Rollup with chain data availability and zkPorter with off-chain data availability, both of which are composable and interoperable. This month, zkSync also upgraded its 2.0 entrance, supporting the payment of network fees with any token, greatly improving user flexibility.

Starknet is a decentralized Validity-Rollup (commonly known as a ZK-Rollup). It runs as a second-layer network on Ethereum, allowing any application to scale massively without affecting Ethereum’s composability and security.

Scroll is an Ethereum-based zkRollup based on zkEVM. As a Layer 2 solution, it addresses Ethereum’s congestion issues. Founded in 2021, Scroll is committed to building a ZK-Rollup that is equivalent to the EVM (Ethereum Virtual Machine) for better compatibility.

Taiko is a ZK-Rollup solution built on Ethereum by the founder of Loopring. Taiko launched the ZK-EVM alpha-2 testnet “Askja” on March 23. On April 17, Taiko will deprecate the alpha-2 testnet and simultaneously launch the alpha-3 testnet to implement work on fixes, improvements, and new components. It has already received investments from multiple well-known institutions.

4. Cross-chain

Layer 2 is essentially a multi-chain operation, so we are also bullish on cross-chain protocols.

Layerzero is currently the hottest cross-chain protocol. It is a cross-chain communication protocol that can transmit “information” from one chain to another by deploying a series of smart contracts (Endpoints) on the chain to achieve decentralized cross-chain information services. Chain, chain. The super-light node runs on the Endpoint, and the “super-light” is reflected in the provision of only the Block header of the specified block. In the transmission process, Oracle and Relayer ensure the effectiveness and security of information transmission.

5. Data availability

Due to the short time that Blob data can be saved, there are problems with calling historical data. Then there will be a new development channel for decentralized storage protocols. At the same time, Layer 2 expansion solutions also need to use data availability layers.

Celestia is a data availability layer project. Based on the Cosmos architecture, it provides data and consensus layers for other Layer1 and Layer2, builds modular blockchains, has a toB business model, and charges other public chains. The principle is the same as the Ethereum sharding solution, which can reduce the current transaction fee bottleneck “data storage cost” of Rollup to a certain extent.

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