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Intro
One challenge in the crypto space has consistently remained: data availability. Currently, for a complete, transparent overview of network activities, rollups are required to post transaction data, inclusive of fraud or validity proofs for settlement verification, back to Layer 1 (L1). This process, while essential, incurs considerable costs.
Enter EIP-4844. This proposed Ethereum Improvement Protocol introduces the concept of blobs—a novel vehicle to enhance data availability. The tangible benefit? Preliminary data suggests that adopting blobs could yield a substantial 10-100 times reduction in rollup transaction expenses. This monumental cost-cutting could translate to Ethereum Layer 2 transactions costing mere pennies. While this upgrade looks like it won't be rolled out until at least January 2024, let's take that time to refresh on what it is and how it will change Ethereum going forward.
What is EIP-4844 (Proto-danksharding or PDS)?
Proto-danksharding (EIP-4844) is the initial proposal of Ethereum's two-step sharding roadmap. It will establish much of the infrastructure required for full danksharding. However, it will not implement data sharding, and validators will still be required to validate full data availability. PDS will incorporate the transaction formats, verification criteria, consensus and execution logic, and gas price modifications specified by Danksharding.
Proto-danksharding provides a temporary solution by utilizing the transaction format that will be used in sharding, but not actual sharded transactions. Post-PDS data will be in the form of “blobs” rather than data in the calldata field. L1 Ethereum block space will be expanded thanks to the new transaction format that also carries an additional piece of data called a blob.
Data Blobs
With blobs, the data is merely a component of the beacon chain and is downloaded by all consensus nodes on the L1. Only the blob’s hash can be accessed via a new opcode. This guarantees the data content will never be accessed by the EVM, reducing the gas cost of posting the data compared to with calldata. Blob transactions can enable up to ~1MB average per block for data storage as opposed to the 10KB currently with calldata.
This is the idea behind blobs: huge blobs of data that are MUCH cheaper than calldata that remain inaccessible to the EVM. EIP-4844 will slash rollup fees by a factor of ten. This will inspire more decentralized applications to transition to rollups and increase developer awareness of modular blockchains.
PDS also reduces Ethereum L1's data requirement because the blob data need not be held indefinitely (discussed more below). The current line of thinking is the L1 need only retain it for a reasonably long enough time so that anyone can have it if needed (~4-8 weeks). This increases the amount of data that can be posted on L1 and hence reduces the data costs for rollups.
Source: Galaxy Digital Research
Ethereum Fees Change with Proto-danksharding
After PDS, Ethereum will have two distinct fee markets that can adjust depending on its own EIP-1559 mechanism. One fee market will be for data availability and one for execution, making the overall economic model more efficient than it was previously. Rollup transactions would have their own “channel,” operating through a brand new data blob market that uses its own fee structure and floating gas limits. This means that even with heightened demand and activity from DeFi or NFTs, data costs won’t go up for rollups. This creates two different gas markets - one for general computation and one specifically for data availability (DA), making the overall economic model more efficient than it was previously.
It is important to note that these functions are far from set in stone and are considered an area of ongoing development and research. Different designs have been proposed, but none have been finalized for the Ethereum network.
Proto-danksharding Disadvantages
Blob transactions are a new way to store and move data on the Ethereum network, but they won't fix all the problems with Ethereum's scalability. As more data is added to the network, it will become harder to store and manage it all. This might lead to changes in how the network works, like how data is stored and shared between users. For example, as more people start using them, there will be more competition for data storage space. This may lead to lower prices for data storage, similar to how gas prices on Ethereum can change. There are also technical challenges to using blob transactions, like how to share them between users and how to handle them when the network is busy. There's ongoing research to address these issues and it will be interesting to see what solutions will be found. In the end, to keep the Ethereum network running smoothly, we may need to limit how much data is stored on it, either by renting out storage space or by removing old data.
There is a distinct disadvantage for PDS, however. The assumption of creating a different market for data blobs relies on the concept that nodes are not expected to maintain that data availability permanently. After blocks are published and nodes verify the data, the blob data is only expected to be held onto by the node for a specified amount of time, i.e., 30-60 days max. After this time period ends, the data can be discarded, i.e., pruned by the nodes, making it no longer "available." This, in theory, should help to lower the barrier to entry of running a node and decentralize validation on Ethereum. Of course, this proposal is far from finalized.
It is important to note that data availability does not refer to the block's downloadability after publication; that is data storage and retrieval. There are many potential problems to address here, one being that it assumes at least one honest party will be willing and able to provide access to the latest state while the full history of the blockchain is stored externally. The good news is that data storage and retrieval are simple, as only one entity in the world is required to keep and serve the data once it has been made accessible. Whether or not this data is saved by Ethereum full nodes and retrieved through the Ethereum peer-to-peer network is a minor technical detail.
This data can be saved and retrieved anywhere and by anybody, including on BitTorrent, on IPFS with Filecoin, and even on centralized servers held by explorers, exchanges, rollup operators, archivists, etc. Therefore, just one entity is required to maintain and serve the Ethereum history for long-term retrieval.
It is essential to note that EIP-4844 precedes full-Danksharding. It will boost the data capacity of the base layer temporarily, however, each node will continue to store the entire data set. Consequently, EIP-4844 does not include data availability sampling, the fundamental technology that enables genuine scalability. Danksharding will introduce data availability sampling (discussed below), in which nodes will store data fragments.
