On Saturday (December 31, 2022), Anthony Sassano, an independent Ethereum educator, investor, and advisor, explained why he believes 2023 will be a great year for Ethereum ($ETH).
“Two major upgrades coming to Ethereum in 2023: – Beacon Chain withdrawals, which, contrary to popular belief, will result in *more* ETH being staked; not less – EIP4844/Proto-Danksharding, which will bring a 10x-100x reduction in rollup fees for users,” Sassano wrote to his over 232K Twitter followers. “This is going to be a big year; buckle up.”
If you’re unfamiliar with EIP 4844, it “introduces a new type of transaction type to Ethereum that accepts’blobs’ of data to be persisted in the beacon node for a short period of time.” These modifications are “forwards compatible with Ethereum’s scaling roadmap” and “blobs are small enough to keep disc use manageable.”
The Ethereum Foundation provides the following explanation for EIP 4844’s motivation:
“Rollups are in the short and medium term, and possibly in the long term, the only trustless scaling solution for Ethereum. Transaction fees on L1 have been extremely high for months, and there is a greater sense of urgency in doing whatever is necessary to facilitate an ecosystem-wide shift to rollups. Many Ethereum users benefit from rollups, which frequently provide fees that are 3-8x lower than the Ethereum base layer itself, and ZK rollups, which have better data compression and can avoid including signatures, have fees that are 40-100x lower than the base layer. Even these fees, however, are prohibitively expensive for many users. The long-term solution to rollups’ long-term inadequacy has always been data sharding, which would add 16 MB per block of dedicated data space to the chain for rollups to use. However, data sharding will still take a significant amount of time to implement and deploy. This EIP provides a stop-gap solution until that point by implementing the sharding transaction format but not actually sharding those transactions. Instead, this transaction format’s data is simply added to the beacon chain and is fully downloaded by all consensus nodes (but can be deleted after only a relatively short delay). This EIP has a lower cap on the number of these transactions that can be included when compared to full data sharding, corresponding to a target of 0.25 MB per block and a limit of 0.5 MB.”
When asked why he had specified such a broad range for rollup fee reductions in EIP 4844, Sassano stated, “Hard to predict what the cost reduction will be for each rollup so we estimate it for now – It is dependent on how each rollup employs blobs – not all rollups are created equal. “
Interestingly, earlier today (1 January 2023), cryptocurrency educator and influencer “DeFi Dad” stated that 2022 was a great year for Ethereum.
On October 26, 2022, Sassano explained how Ethereum’s Merge upgrade affected net ETH issuance.
“It’s been 41 days since The Merge,” said Sassano, who is also the Co-Founder of EthHub (“the essential resource for Ethereum information featuring open source documentation, podcast, and newsletter”). If Ethereum was still on PoW, miners would be able to dump up to 488,000 ETH into this pump. Instead, net issuance since the merger has been only 1,300 ETH, and stakers have yet to sell any of it… And you’re still pessimistic? Actually, it’s even more bullish because the PoW figure above includes the burn. Without the burn, ETH going to miners would have been around 550,000 since The Merge. “