Wind and clouds surge, ups and downs: A review of the changes and history of Ethereum in 2024

Authored by: TIA, Techub News

The wind rises and the clouds surge, ups and downs, or it may be "full of crises"......

For Ethereum, this year is not an ordinary one. There have been a series of peaks after the approval of the US spot ETF, as well as crises such as facing competition from Solana and various 'anti-Ethereum' remarks. In addition, there have been personnel changes, with a researcher joining Eigenlayer as an advisor and then resigning from Eigenlayer to better develop Ethereum. There are also the Beam Chain proposed at Devcon and the issue of liquidity fragmentation. Every detail reflects this extraordinary year.

Fluctuating Price Trends

Judging from the price chart of Ethereum, it is already clear how many ups and downs it has experienced. From more than $2,000 at the beginning of the year to more than $4,000 in March, back to the beginning of the word, and then to more than $4,000 again, there is a lot of drama and uncertainty.

On January 11, 2024, the U.S. Securities and Exchange Commission (SEC) approved the listing of 11 spot Bitcoin ETFs, riding the wave of ETFs and the expectation of approving Ethereum ETFs. Ethereum has skyrocketed, nearly doubling in price in just over a month.

On July 23, the U.S. spot Ethereum ETF went live. Although the trading volume was booming after the spot Ethereum ETF went live, the trading volume exceeded 200 million U.S. dollars in just 45 minutes. However, due to the fact that the price increase in the first half of the year already included the expectation of issuing Ethereum ETF, the U.S. spot Ethereum ETF did not achieve a high increase.

Due to the lack of sustainable innovation in the industry to support the high price, the price of Ethereum began to fall wildly again in August. Starting on July 30, the Ethereum price began a 7-day losing streak. From a high of $3366 to a low of $2111. After that, there was a long sideways.

Until President Trump won the election and sang all the way, Ethereum rose from a two-digit number starting with 2 to a high of $4,170.

The continuous 7-day decline and the continuous 7-day rise, as well as the roller coaster-like multiplier fluctuations, reflect the high volatility of the cryptocurrency market and also demonstrate the influence of market participants' emotions, expectations, and external events. (That's right. This is crypto ?️)

Behind the rise and fall is a series of iron logic that has to be admitted. For example, the sharp rise in the expectations of the Ethereum ETF listing after the approval of the Bitcoin ETF at the beginning of the year, such as the waterfall back to the original point caused by the inability of ETFs alone to sustainably drive industries that lack real innovation and lasting market demand; Another example is the crazy rise in crypto after Trump took office......

Looking back at the price trend of Ethereum, we can easily find that its fluctuations are not only driven by external macro factors, but technological progress often plays an important role. From the launch of Ethereum 2.0, to the implementation of Layer2 scalability solutions, and then to the continuous optimization and updates of the Ethereum network, each technological breakthrough has become the focus of the market. However, the gains brought about by these advances are not immediate, but often obscured by short-term market sentiment.

Beam Chain, Dencun Upgrade, Pectra Upgrade and other EIPs

Beam Chain

Beam Chain was proposed by Ethereum researcher Justin Drake at Devcon in Thailand. Beam Chain is Justin's proposal to redesign the Ethereum consensus layer, which is a further upgrade to the Beacon Chain. The main goals of this proposal are related to MEV, reducing the staking threshold, achieving fast finality single slot finality, and ZK-ing the entire consensus layer. This proposal takes advantage of the breakthrough in SNARK technology, which is like an upgrade to the outdated Beacon Chain design from 5 years ago.

Dencun Upgrade

Ethereum's Dencun upgrade went live on March 13, 2024, with a hard fork combining two core improvements: the Deneb consensus layer and the Cancun execution layer update. The highlight of the upgrade is EIP-4844 Proto-danksharding, which allows Rollup to send transactions, proofs, and other data to Layer 1 in the form of blobs. Since blobs are temporary storage and access to off-chain data, using blobs will make rollups much less expensive than the original calldata. But as a result, Ethereum's revenue has dropped significantly.

EIP-4844 is a controversial EIP. In the short term, it is indeed the reason for the sharp decline in Ethereum's revenue, and it is also one of the main reasons why Ethereum has been criticized; However, some have called the EIP "a small step for Sharding, a giant step for Ethereum scaling", and it is unclear what the impact will be in the long run.

The Dencun upgrade also includes EIPs such as EIP-7516, EIP-6780, EIP-5656, EIP-1153, which aim to improve the efficiency of Ethereum. For specific EIPs included in the Dencun upgrade, please refer to the table below.

| | | | | --- | --- | --- | | EIP-4788 | Consensus Layer | Improve the information exchange between the execution layer and the consensus layer of Ethereum. Prior to EIP-4788, the EVM did not have direct access to the most up-to-date catalog, and it had to rely on indirect methods to understand what was happening in the beacon chain. Whereas, EIP-4788 proposes to put the beacon block root (the hash tree root of the digest or parent block) into each EVM block. In this way, the transfer of information and data can be carried out without relying on third parties | EIP-7044 | Consensus Layer | Improving the Exit Mechanism for Ethereum Staking | | EIP-7045 | Consensus Layer | Extend the maximum time for Attester to submit a proof. | | EIP-7514 | Consensus Layer | Introduces a limit on the "epoch churn limit" to restrict the growth rate of Ethereum validators. | EIP-4844 | Execution Layer | EIP-4844, also known as the proto-danksharding proposal, reduces the gas cost of Layer 2 data published to the Ethereum mainnet by enabling temporary storage and access of off-chain data | EIP-7516 | Execution Layer | is an opcode that returns the current data blob base charge. | | EIP-6780 | Execution Layer | is an opcode that allows smart contracts to self-destruct from the blockchain. | | EIP-5656 | Execution Layer | is an opcode that optimizes the process of replicating data in memory | EIP-1153 | Execution Layer | is an opcode that allows smart contracts to use instantaneous storage, i.e., the storage is cleared at the end of the transaction execution. |

Pectra Upgrade

The Pectra upgrade combines two separate upgrades: the Prague execution layer upgrade and the Electra consensus layer upgrade. The Pectra upgrade is an upgrade that precedes the Fusaka upgrade, which was specifically designed to implement the Verkle transition. Since Ethereum developers agree that no other substantial changes can be combined with Verkle, the Pectra upgrade is a series of other changes that precede the implementation of the Verkle transition. The Verkle transition represents the migration of all Ethereum state data from the Merkle Patricia tree structure to the Verkle structure. This will enable nodes to generate smaller proofs of state data that can be more easily passed on to other nodes, and is a prerequisite for implementing a "stateless client".

The Pectra upgrade is tentatively scheduled to be activated on the mainnet in early 2025. Among them, the most important is the account abstraction EIP-7702, which aims to extend the smart account functionality to EOA.

EIP-7702 is an improvement of EIP-3074, proposed in May 2024. EIP-3074 is the community's first attempt to explore extending smart account functionality to EOA. Unlike ERC-4337 (which introduces a smart contract called EntryPoint to make smart contracts behave like user accounts), EIP-3074 requires Ethereum hard fork to implement, while ERC-4337 does not need to change the way the implementation account abstraction is executed or the consensus layer. Its main function is to extend smart account functionality to EOA by introducing two opcodes - AUTH and AUTHCALL.

EIP-7702 is a further development of EIP-3074. Unlike EIP-3074's opcode implementation of the smart contract mode for EOA, with EIP-7702, EOA can now store an address called a 'delegation indicator' that points to a smart contract. When a transaction is sent to EOA, it can execute the code at the specified address like executing its own code, similar to the way 'delegate call' works in smart contracts.

EIP-7702 brings smart account functionality to EOA, while addressing many concerns raised by EIP-3074, providing full compatibility with ERC-4337 and a clear upgrade path, and is planned to be included in the Pectra upgrade.

Since Pectra will focus on Verkle Tree after the upgrade, EIP-7702 may be the last EIP related to account abstraction upgrades, as there may not be another 2-year window to include upgrades related to account abstraction after this.

So far, other code changes related to Pectra mainly focus on improving the experience for users and smart contract developers. For a more detailed introduction to the Pectra upgrade, please refer to this article.

Other EIPs

Not all approved EIPs need to be used after a hard fork upgrade. Ethereum has also passed some significant process/standard EIPs this year, such as the cross-chain intent standard ERC-7683 and the account abstraction standard ERC-4337 (ERC is a subset of EIP). These changes rely more on community acceptance of the EIP, whether the community is willing to accept or actively implement it. Some EIPs that need to be used after a hard fork upgrade also need to wait for user and DApp acceptance to achieve widespread adoption.

Interoperability: Cross-Chain/Rollup Standard

With the Ethereum Rollup-centric roadmap and the growing number of various Layer 1s, on-chain liquidity is fragmented and composability, one of the biggest advantages of on-chain, is gradually lost with fragmentation.

There are two levels of interoperability issues that need to be addressed: one is how to achieve fast, low-cost, and secure cross-chain asset interoperability, and the second is how to achieve synchronous composability.

Currently, there are many protocols that can solve the problem of the first gradient. Protocols like Across have greatly improved cross-chain speed and have low transaction fees. Due to its intent-based architecture, the security issues of cross-chain transactions have been fully transferred to the solver. Currently, some proposals related to cross-chain/Rollup are mainly focused on solving some preliminary standard issues.

The subsequent transferability will be implemented by Based Rollup with synchronous composability. Specific proposals regarding cross-chain/Rollup are as follows:

ERC-7683

ERC-7683 is an intent cross-chain standard proposed by Across and Uniswap. Through this standard, all intent interoperable orders can share the solver network.

The combination of ERC-7683 and ERC-3668 and ERC-3770 will bring an initial interoperability experience to L2. ERC-7683 creates a unified framework for cross-chain intent, accessible to all solvers; EIP-3370 adds identification labels to blockchain addresses, clarifying the specific blockchain network to which the address belongs, and preventing users from sending money to the wrong network. ERC-3668 CCIP Read is a good example of off-chain validation, providing a security mechanism to access off-chain data without additional trust assumptions, effectively automatically supporting light clients compatible with L2 blockchains without any additional configuration by the wallet.

RIP-7755 (L2 Calling Standard)

RIP-7755 is the L2 calling standard, which was introduced by the Base research team on October 17th, aiming to achieve seamless cross-chain interoperability between different Ethereum Layer2 networks, especially mainstream Layer2 networks such as Optimism and Arbitrum. The concept verification of RIP-7755 is applicable to blockchains that comply with the EIP-4788 standard, and it is currently able to verify the status of OP Stack chain and Arbitrum.

Summary

The above is a comprehensive review of the major events that Ethereum has experienced in 2024. Of course, the journey of Ethereum in 2024 is far from over. It also includes the competition with Solana, unclear positioning and centralization criticism, large institutions starting to hold Ethereum spot ETFs (Michigan Pension Fund disclosed holding over 10 million USD Ethereum spot ETF), large institutions launching tokenized products on Ethereum (UBS launching uMINT, a tokenized currency market fund based on Ethereum in Singapore, Goldman Sachs tokenizing 20 million USD commercial bills on Ethereum), and after facing a crisis, Vitalik Buterin published 6 articles about Ethereum's roadmap consecutively, and conducted AMA on Ethereum Research Reddit, and so on...

And ultimately, everything points to a lingering question: where does the future road lead?