EIP4844 and Its Impact on Rollup Economics

Research Analyst/
Jul 31, 2023

Table of Contents

1. Introduction

2. History and Evolution of Ethereum Sharding

2-1. Early Ethereum sharding efforts: Hypercubes, Hub and Spoke Chains, Super Quadratic Sharding, Quadratic Sharding

2-2. The pursuit of simplicity and pragmatism: Full execution sharding → Data sharding

3. Danksharding

3-1. Danksharding, a new blockchain architecture for data sharding

3-2. Minimizing centralization: PBS (Proposer Builder Separation) and crList

3-3. Ensuring scalability and trust: DAS, Erasure Coding, and KZG Commitments

4. EIP-4844: Proto-Danksharding

4-1. EIP-4844, the cornerstone of Danksharding

4-2. Simply reducing calldata cost can cause block size issues

4-3. Structure and creation of blob transactions

5. Impact of EIP-4844 on Rollup Costs

5-1. DA (L1 publication) costs currently account for over 90% of total rollup costs

5-2. With the implementation of EIP4844, the DA cost of rollups is expected to be almost free, and a significant increase in the blob fee would require the demand for rollups to grow by more than 10 times

5-3. Changing the cost structure of blobs is being actively discussed within the Ethereum community

6. Closing Thoughts

Annotation) Types of Ethereum data storage

A1. The main storage spaces in EVM are categorized as Storage, Memory, Stack, and Calldata

A2. The space used by rollups is called Calldata

1. Introduction

Alphas are hidden in EIPs. In a month before and after the EIP-1559 (London), EIP-3675 (The Merge), and EIP-4895 (Shanghai) upgrades, ETH prices rose 10% to 80%. Now, the next upgrade is the Deneb-Cancun-combined Dencun hard fork, scheduled for the end of this year. And the most noted upgrade in Dencun is the EIP-4844, a.k.a. Proto-Danksharding, the very first step toward implementing Ethereum’s sharding roadmap and a proposal that will dramatically reduce the operational cost of rollups.

This report is set up in two parts. The first follows in the footsteps of Ethereum sharding, exploring how the history of changes in sharding and Ethereum’s long-term vision of Danksharding. And in the second part, we'll look at the structure and implications of Proto-Danksharding and envision how the economic structure of rollups will change after EIP-4844.

2. History and Evolution of Ethereum Sharding

2-1. Early Ethereum sharding efforts: Hypercubes, Hub and Spoke Chains, Super Quadratic Sharding, Quadratic Sharding

In retrospect, the scalability solutions proposed by the nascent Ethereum community such as Hypercubes, Super Quadratic Sharding, and Hub and Spoke Chains were notably audacious and ahead of their time. In particular, hypercube and the hub and spoke chains were proposed by Vitalik in late 2014, before the Ethereum mainnet was even launched. (see “Scalability, Part 2: Hypercubes”). While hub and spoke chains were an early form of today’s Polkadot Relay Chain-Parachain structure, hypercube emerged as an answer to hub and spoke chains; flaws. Hypercube's advantage is improved transaction speed via cross-substate messaging. The model unfortunately was not adopted due to its many attack vectors and complex implementation, but these ideas were later vital in shaping the quadratic sharding* model that appeared on the ETH2 roadmap. Sharding on Ethereum has since undergone three major shifts that made the sharding model we know today.

*Quadratic sharding: The blockchain is separated into a beacon chain and a chain of 64 shards, and each shard processes transactions in parallel and shoots headers to the beacon block. Each beacon block contains transactions for all 64 shards, and each shard block is validated by 64 committees composed of Ethereum's validators. The committees are randomly assembled through a process called random sampling (see “Sharding: The Future of the Ethereum Blockchain”).