API/RSS

Social

Eui Research Institute &BlockBeats joint release: Ethereum 2.0 solution evolution report

23-01-13 11:03

Read this article in 84 Minutes

AI summary

View the summary

Foreword:

I. Ethereum main problems and solution evolution.

1.1 Main Problems of Ethereum

1.2 Evolution Sequence of Solutions .

Ii. Ethereum 2.0 Sharding Expansion Scheme

2.1 Fragment Expansion Solution Analysis

2.1.1 Scalability -- Shards

2.1.2 Decentralization -- consensus mechanism PoW to PoS

2.1.3 Security -- Beacon Chain, Casper Consensus Mechanism

2.2 Difficulties caused by fragmentation

2.2.1 Overload Problem of Cross-shard Communication

2.2.2 Difficulty in Realizing Large-scale Network Node Data Synchronization after Fragmentation

Third, Ethereum 2.0 latest solution analysis

3.1 Layer2 Expansion Scheme

3.2 Main problems to be solved by Taifang at the present stage.

3.2.1 Paving the way for Layer2

3.2.2 MEV Aggravation Caused by Sorting and blocking Roles in PoS Authentication

3.2.3 State Expansion Problem

3.3 Ethereum 2.0 Latest Roadmap

3.4 Analysis of Key Schemes

3.4.1 IP-4844 Introduces "blob" transaction types to reduce Rollup costs & NBSP;& NBSP;& NBSP;& NBSP;& NBSP;

3.4.2 Data Availability Sampling (DAS) -- Reducing the burden of nodes verifying data availability

3.4.3 PBS -- Role separation during block creation, weakening MEV

3.4.4 Verkle Tree -- Optimizes the underlying data structure of Ethereum for faster verification and better performance.

3.4.5 IP-4444 -- Trim memory

Iv. Opportunities, Risks and Prospects of Ethereum 2.0

4.1 Opportunities

Staking, staking, and staking.

4.1. 2 Layer2 Track Project and related infrastructure take off.

4.2 Risk

4.2.1 Landing risk

4.2.2 Competition Risk

4.2.3 Risk of node Centralization

4.3 Outlook

4.3.1 Establish the industry position

4.3.2 Promote Ecological Prosperity

Preface:

Recently, the core developer conference of Ethereum finalized the "Shanghai upgrade" hard fork plan to be carried out in March 2023, this upgrade will release the ETH withdrawal pledged by the beacon chain, but also accompanied by the implementation of many EIP improvement proposals for GAS optimization and EVM optimization. Beacon Chain has been online in December 2020 to start node pledge service. In order to ensure the stability of the network, all ETH participating in pledge can only wait for the open withdrawal of "Shanghai Upgrade" after the "merger". At present, the beacon chain has nearly 500,000 nodes, and its chained deposit limit is more than 15 million ETH. Open withdrawal will have a certain impact on the number of Ethereum network nodes and ETH market price.

(Beacon chain block data, image from https://beaconscan.com/)

Following Ethereum's successful "merger" in August 2022, the entire network officially transited to a PoS consensus mechanism, a key milestone in Ethereum 2.0's scalable blueprint. As the "Shanghai Upgrade" approaches, Ethereum 2.0 is moving a step further. And recently, V God also announced the latest roadmap of Ethereum, its latest solution and process has once again become a topic of intense attention. So how is Ethereum 2.0 going so far? What are the main problems now facing? What is its latest plan? Its realization, and what impact will it bring to the development of the industry? Eui Institute will explain Ethereum 2.0 in detail from four parts: evolution of major issues and solutions of Ethereum, solution analysis of sharding capacity expansion, solution analysis of the latest, future opportunities and risks. This report is for informational purposes only and does not constitute any investment advice.

Note: The Ethereum Foundation previously announced that Ethereum faced a shift in positioning while upgrading its protocols, and that by the end of 2021 core developers had stopped using the terms ETH1.0 and ETH2.0, replacing them with "execution layer" and "consensus layer" respectively. However, the name change has not affected the established upgrade route of Ethereum, as Ethereum 2.0 has become so popular that this article will continue to use the name "Ethereum 2.0".

I. Evolution of major issues and solutions of Ethereum

1.1 The main problem of Ethereum -- Capacity expansion

Since its establishment, Ethereum has occupied the reputation of the first public chain. It has the largest developer community in the world, and the number of Dapps far outweighs other public chains. However, Ethereum, which is positioned as the "world computer", can only process about 20 transactions per second at present, which is difficult to support even an average scale commercial application. Frequent on-chain congestion and high Gas charges make the user experience very poor, which limits the development of Ethereum to a large extent. For users, the most urgent need for Ethereum right now is to improve scalability.

Currently, there are two types of blockchain capacity expansion schemes: one is on-chain capacity expansion, namely the so-called Layer1 scheme, which improves the performance of core blockchain by transforming the blockchain itself, such as increasing the block capacity, isolation witness, DAG technology, changing consensus mechanism and sharding. The second type is off-chain capacity expansion. By placing the transaction execution and processing of data under the chain, the main chain only verifies the validity of the transaction to provide security guarantee, which is also a relatively mainstream capacity expansion method at present. It is equivalent to building a "viaduct" on the main network to solve the problems of congestion and high transaction fees.

Layer2, which we often hear about, can also be classified under the down chain expansion category. In this article, Layer2 refers to the layer 2 network of the main Ethereum network. In essence, a large number of transactions are carried out on Layer2, and only the final settlement process is placed on Layer1.

(Overview of capacity expansion scheme, picture from sharding technology research report)

1.2 Solution Evolution Sequence

In order to solve the bottleneck problem of Ethereum network performance, it is inevitable to face the "impossible triangle" problem, that is, how to simultaneously meet the three characteristics of blockchain decentralization, security and scalability. People continue to explore the possibilities, which, of course, is not easy, and the details of Ethereum 2.0 have evolved through trial and error, with several tweaks.

(Impossible triangle, picture from the Internet)

State sharding was originally intended as a way for Ethereum to achieve its own capacity expansion, which could significantly increase network performance and capacity without increasing node hardware requirements or decreasing decentralization.

To put it simply, the tasks in the block are allocated to multiple groups of shard nodes for parallel processing, thus increasing the processing speed of the entire network. In order to ensure the security of the chain, the scheme introduces the beacon chain as the center of the system to manage all independent parallel fragment chains. In addition, Ethereum also from PoW to PoS consensus. Sharding, beacon chain, PoW to PoS, together form the core of the original version of Ethereum 2.0 solution.

However, the sharding scheme also brings new problems, such as the overload of cross-sharding communication, and the difficulty of realizing a wide range of network node data synchronization requirements caused by the rotation of verifiers after each cycle. These problems have a great impact on the efficiency and security of the chain, but it is difficult to find a good solution.

Since then, Ethereum has repositioned itself as the clearing layer and data availability layer, leaving the real computing performance improvements to Layer2. Ethereum should be decentralized and secure, make the underlying chain absolutely reliable and trustworthy, achieve global consensus, and transfer the trust to Layer2 in the way of economic incentives. Layer2, on the other hand, aims to improve efficiency and reduce costs to meet the business needs of various business scenarios.

Danksharding, a Layer2 expansion solution, was proposed in late 2021, sparking a lot of discussion in the Ethereum community. Later, on July 19, 2022, Vitalik elaborated on Ethereum 2.0 roadmap based on Layer2 expansion at ETHCC, an ethereum conference, which is divided into five key development stages: The Merge, The Surge, The Verge, The Purge, The Splurge, and claims that Ethereum will be able to process 100,000 transactions per second after completing five key phases. On November 5, 2022, V God announced Ethereum's latest roadmap, adding The Scourge of MEV risk to the five key routes. So far, the future development and evolution of Ethereum will mainly be divided into six key routes, and these six key routes are advancing simultaneously.

Ii. Ethereum 2.0 sharding expansion Scheme

2.1 Fragment Expansion Solution Analysis

Initially, Ethereum planned to solve the impossible triangle problem by combining sharding, consensus mechanism to PoS, beacon chain and Casper governance mechanism to achieve the goal of capacity expansion. At present, except sharding, others have been basically implemented (Ethereum has been online beacon chain in December 2020, and realized "Merge" upgrade in August 2022, completely transforming from PoW to PoS mining).

Specifically:

(Ethereum 2.0's sharding solution to the Impossible triangle problem, image from Aui Institute)

2.1.1 Scalability -- Shards (Shards)

Sharding is the best solution for blockchain expansion, which can greatly improve network performance and capacity without increasing node hardware requirements or reducing the degree of decentralization. It can be divided into network sharding, transaction sharding and state sharding. The state sharding that Ethereum hopes to achieve is the most difficult to achieve.

In physical space, sharding divides all nodes in a public chain network into different groups, and each group is called a sharding. All nodes in the public chain used to perform the same calculation, but now the tasks in the block are grouped and allocated to different shards for processing. Nodes in a single shard only take on part of the work of the whole network, so that each shard can work in parallel, thus improving the performance of the whole network.

2.1.2 Decentralization -- consensus mechanism from PoW to PoS

Under the PoW mechanism, the threshold of becoming a verification node is high, and expensive professional mining machines need to be purchased for computing power competition, which also causes a large amount of energy waste. Ethereum is determined to solve the problem of energy waste with PoS consensus.

The more nodes that participate in authentication, the more decentralized and decentralized the Ethereum network will be, and the more secure it will be against attacks. Ethereum is also working on ways to reduce the hardware requirements of network nodes to allow more users to participate. It lowers the threshold of entry to the verification node by pledging 32 ETH. Any user pledging 32 ETH has the opportunity to be selected as a member of the verifier committee and block proposer by the beacon chain stochastic algorithm, without the need for computational power.

2.1.3 Security -- beacon chain, Casper consensus mechanism

The introduction of sharding and PoS consensus mechanisms has added new security challenges to Ethereum. For example, single shard 51% attack caused by sharding, double flower attack between shards, and non-interested attack, long range attack and simple attack caused by PoS consensus mechanism. Ethereum Bridges these two types of risks and addresses security issues through beacon chains and a consensus mechanism called Casper.

1) Beacon chain -- Randomly assign validators to the system to ensure the final certainty of the chain

Different from ordinary blockchain, beacon chain is based on Slot and Epoch as the base time unit. Their main function is to control the rhythm of beacon chain block output. Slot is the time to complete a block confirmation (currently 12 seconds), and Epoch is the period to carry out a round of verifier shuffling (currently 32 slots).

(Slot and Epoch are illustrated in "Block Output and Validation")

Randomly assign validators to the system

The randomness of block production in a blockchain system is critical. For a public chain, when the tasks of the whole network are divided into different shards, the computing power is also divided into corresponding shards. A single shard can only get 1/n of the original computational power, so the difficulty of launching 51% attacks on a single shard will be reduced to 1/n, which will make the shard more easily controlled by malicious miners. Therefore, for a sharding system, good randomness is needed to prevent specific fragments from being attacked separately, and the beacon chain provides this randomness to the system through RANDAO random number.

At the beginning of each Epoch, the beacon chain uses RANDAO random numbers to select block proposers from the verifiers for each slot, and randomly groups all the verifiers in the whole network into a verifier committee, which is then assigned to specific slots. The proposer is responsible for packaging the trade proposal block, and the verifier board is responsible for signature voting on the proposed block (the two scopes are not mutually exclusive; a verifier may be both a block proposer for a slot and a verifier board assigned to that slot). After the completion of the block-out and verification tasks of an Epoch, the beacon chain reshuffles all the verification nodes for the next round of random allocation. With the help of RANDAO random number generation algorithm, the election process of verification nodes fundamentally avoids collusion between verification nodes and improves the security of the protocol.

(Node block process, picture from the European Institute)

Cross-shard communication is used to solve the problem of double-flower attack between shards

A double-spending attack is when the same amount of money is distributed to two or more people. In sharding, an attacker can try to send the same money to the accounts in different shards to implement the double-flower attack, which requires cross-sharding communication to avoid the double-flower attack.

Cross-fragment communication is completed with the help of beacon chain, which synchronously updates the block headers of all fragments as verification information. Different fragments can communicate through the beacon chain, and the beacon chain, as a hub, can record the state and information of all fragments, avoiding the double-bloom problem.

Specifically: When shard 1 sends a message to Shard 2, Shard 1 packs the relevant information into its block header. Wait for the beacon chain to pack the block header of Fragment 1 into the new block. After the beacon chain completes the block consensus, fragment 2 will receive the message broadcast by the beacon chain that contains the block header of fragment 1. After that, Shard 2 validates the information about Shard 1 and starts performing the operation, sending the completed block information to the beacon chain.

(Cross-shard communication process, picture from EUI Institute)

Ensure the final certainty of the chain

The so-called final certainty of the chain means that the block can be confirmed to be safe and cannot be subverted. BTC adopts the longest chain principle. Generally, it needs to wait for 6 blocks before the transaction can confirm the security state. In fact, this is an implicit certainty that the probability of tampering with the block after 6 blocks in the current BTC computational condition is very low and negligible. However, in PoS chain, the attacker can make the rewritten history chain catch up with the original main chain in a short time. If determined by the longest chain principle, it is very likely that the real main chain will be usurped, so Ethereum introduces explicit final certainty.

Ethereum verifies the final certainty of the chain through a checkpoint per Epoch cycle. Specifically, it sets the first block within each Epoch as the checkpoint. The consensus verification nodes will vote on the block content from the last deterministic checkpoint to this checkpoint. When this checkpoint receives more than 2/3 of the confirmation votes, it also becomes a deterministic checkpoint, and the block becomes unchangeable. Ultimately, all blocks prior to the deterministic checkpoint are identified, and subsequent miners are not required to add security to the identified blocks.

(Check point, photo from European Institute of Technology)

2) Consensus mechanism Casper -- standardizing node behavior with reward and punishment mechanism

As the core consensus protocol of Ethereum 2.0, Casper is responsible for the management of system nodes, the implementation of rewards and punishments for verification, solving the problems of non-interested attacks, long-range attacks and simple attacks in PoS chain, and standardizing node behavior with reward and punishment mechanism.

Since PoS has the problem of "no-stake attack", that is, under PoS mechanism, a malicious node verifier can bet its coins on the fork chain to push hard fork without any loss. Therefore, the holder of the currency needs to mortgage a certain number of ETH to the beacon chain to apply for the node.

The beacon chain also tracks and manages authentication nodes. For each block successfully packaged, nodes receive an Ethereum reward proportional to the number of tokens they hold. Nodes are responsible for producing blocks, verifying blocks, and completing tasks assigned to them online at all times. If a majority of the verifiers reject the blocks they have created, the nodes risk losing their pledged tokens and forfeiting their pledged ETH if the verifiers fail to fulfill their responsibility to vote on the blocks. Thus, Casper forces validators to act honestly and follow consensus rules through a system of rewards and penalties.

2.2 Difficulties caused by fragmentation

As mentioned above, sharding, beacon chain, PoW to PoS, together form the core of the original Ethereum 2.0 solution, but sharding solution is not only difficult to implement, but also brings new problems. Specifically:

2.2.1 Cross-shard communication overload problem

From a macro perspective, the introduction of sharding to solve performance problems does not reduce the original total workload, but distributes the original workload to each sharding, and improves the overall performance by increasing the parallel capability of the original system. On the contrary, the introduction of sharding, in terms of the total workload, also increases the workload of cross-sharding verification and transaction. Consider an extreme case where all transactions within the system are cross-shard. In this case, the performance of the shard system is much lower than that of the non-shard system.

2.2.2 It is difficult to realize large-scale network node data synchronization requirements after fragmentation

After completing the block-out and validation tasks of an Epoch, the beacon chain will reshuffle all the verifiers, and each verifier will be rearranged in the fragment chain responsible for. However, to process a new sharding chain, it is necessary to have the state of the new sharding chain and the corresponding transaction data, which requires a large range of network node data synchronization. This is quite complicated to implement, and it is difficult to ensure that the verifiers can complete the synchronization at the specified time node, resulting in network delays.

Third, Ethereum 2.0 latest solution analysis

3.1 Layer2 Expansion Scheme

Due to the difficulty of sharding scheme implementation and many new problems, Ethereum 2.0 finally turned to Layer2 expansion under the consideration of various factors.

(Ethereum 2.0's Layer2 solution to the Impossible triangle problem, picture from the OuI Institute)

The key to Layer2 capacity expansion is to migrate data calculation and storage to Layer2, reduce the data calculation pressure of Ethereum, and only put the final settlement process on the Ethereum chain to ensure the security of assets.

A variety of schemes exist, including state channel, side chain, Plasma, Rollup and Validum. At present, the most mainstream scheme is Rollup, which can be divided into fraud proof mechanism project or zero-knowledge proof mechanism project by ensuring the difference between the security and consensus realization methods of two-layer network assets. Now, the fraud proof mechanism project has attracted many projects because it is easy to implement and EVM-compatible; Zero-knowledge proof mechanism is safer, but it is more difficult to realize and is still in the stage of exploration and development.

Different Layer2 expansion schemes make different choices in terms of security, performance, availability, and scalability in terms of data and consensus mechanism, which determines that various Layer2 expansion schemes are suitable for different application scenarios.

(Current Layer2 solution difference, image from https://l2beat.com/)

3.2 Main problems to be solved by Ethereum at this stage

After switching to Layer2 expansion, the main problems Ethereum needs to solve at this stage are MEV, state inflation, and pave the way for Layer2 to operate more easily and efficiently after access.

3.2.1 Paving the way for Layer2

In Ethereum's latest roadmap, Rollups has been adopted as the main solution for capacity expansion. Near - and medium-term goals, and even long-term goals, will be optimized around Rollups.

Layer2 executes transactions outside the main Ethereum chain. After the execution, the execution results and transaction data are compressed and sent back to Layer1, so that others can verify the correctness of the transaction results, that is, verify the data availability.

For a Rollup transaction, there are three main types of costs: execution costs (costs for all nodes in the network to execute the transaction and verify its validity), storage/state costs (costs for updating the new state), and data availability costs (costs for publishing the data to Layer1), of which data availability costs account for the bulk. Therefore, the main problem Rollup faces is the high handling cost of submitting data to Layer1.

3.2.2 & have spentMEV exacerbates the problem caused by sorting and blocking roles in PoS authentication

MEV (Miner/Maximum Extractable Value) is short for "Miner/ maximum extractable value". Because accounting rights holders, represented by miners, and block transaction writers have the right to screen and rank transactions on the chain, ecological participants, such as arbitrage robots, attackers, and even miners themselves, take advantage of this right to obtain additional income.

For the average user, this will not only lead to higher Gas bills, congestion and poor experience, but also make on-chain transactions less fair. Mevs are now very common in the Ethereum ecosystem. According to Flashbots, nearly $700 million worth of MEVs have been captured since 2020, and they are on the rise. If left unchecked, it will pose a huge threat to Ethereum.

(Cumulative extract MEV, image from Explore.flashbots.net)

In proof of work, the miner has mastered the roles of inclusion, exclusion, and sequence of trades, and the arbitrageur can raise the gas fee to induce the miner to package his trades first. After Ethereum converts to PoS, each round of Epoch beacon chain will randomly select a block proposer for each Slot from the verifier, which is responsible for ordering transactions in the block and proposing blocks. Pre-selected block proposers can see the user's transactions and therefore propose their own deals, directly benefiting themselves by controlling the order of transactions. This exacerbated Ethereum's MEV problem.

In Layer2, Layer2 processes the transaction and only sends the proof result to Ethereum. This reduces the transaction weight on the Ethereum chain to some extent, which can hide some opportunities for arbitrageurs and miners to obtain MEVs. However, it is also necessary to solve the problem of MEV aggravation in PoS authentication where sorting and blocking are performed by the block proposer.

3.2.3 Status Expansion Problem

State is the specific external presentation of the system at a given time, including account balances, hash values of contract codes, or stored data. Ethereum uses an account model, with each account consisting of user status and contract status. The full Ethereum status records all accounts and associated account balances, as well as the history of all smart contracts deployed and executed in the EVM. Without the latest status of an account, you don't know what's really going on in that account.

The node generating the block needs to access and check the current state of the system, record the new state after execution, and synchronize with other nodes in the network. Other client nodes need to verify and execute transactions within the block to ensure that consensus is always present in the network. The state of the system continues to change as new blocks are confirmed.

As the performance of Ethereum is greatly improved, more new users will enter the Ethereum ecosystem, and more new data will be generated, and the status data of the account will continue to expand. This inevitably requires nodes to have larger storage space and stronger performance, which increases the threshold of nodes, thus resulting in the reduction and centralization of the number of network nodes, and reducing the degree of decentralization of the network.

3.3 Ethereum 2.0 Latest Roadmap

(ETHereum's latest roadmap, image from Ethereum.cn)

The latest Ethereum roadmap released by Vitalik divides The future evolution of Ethereum into six key routes: The Merge, The Surge, The Scourge, The Verge, The Purge, and The Splurge. The green part of the figure represents the progress of progress. It can be seen that in addition to solving the main issues facing Ethereum at this stage, there are also a lot of goals around performance, security risks, privacy, account system AA has found a path to achieve. Specifically:

The Merge - Achieve an ideal, simple, robust, decentralized PoS consensus

Ethereum has successfully switched to PoS, and the next steps are mainly to fix network authenticator security and a few features, mainly:

Activation of beacon chain withdrawal function: ready for deployment during Shanghai upgrade.

Distributed Validators (DV) : Distributed Validators (DV) technology aims to distribute the work of Ethereum validators across a set of distributed nodes, improving security, online resilience, and more than traditional technologies that currently run validators' orders on a single machine.

Single Secret Leader Election (SSLE) : Currently, the candidates selected from each Slot in the beacon chain are disclosed in advance, making them vulnerable to DoS attacks. The latest scheme makes the process secret so that only the proposer knows who he or she is, mitigating potential risks.

Single Slot Finality (SSF) : Single slot finality. Currently, the Ethereum block requires 64 to 95 slots (about 15 minutes) to achieve final determinism. Vitalik believes that there is good reason to reduce the final determinism time to one slot, so as to achieve better user experience.

The Surge (Take off) -- A Layer2 Rollup as the base technology route for capacity expansion, achieving TPS of 100,000 + per second

Key stage:

Proto-Danksharding implements initial Rollup expansion: EIP-4844 introduces a new transaction type to Ethereum that carries transient blob data, reduces Rollup overhead by 10-100x, and achieves initial capacity expansion combined with preliminary OP Rollup fraud proof and ZK-EVMs assistance. This will greatly optimize the user experience of Ethereum Layer2.

Achieve complete Rollup capacity expansion: While improving the basic optimization of the former, focus on the optimization of data availability DA, such as the client of data availability sampling, P2P design, etc.

The Scourge of disease -- ensuring that reliable, trusted, and neutral trading was incorporated into the scourge of the disease and avoiding the centralization and other protocol risks of MEVs

Key stage:

The key milestone is PBS (proposer-Builder Separation), which puts ProPoSer and Builder Separation at a protocol level, alleviating the MEV problem.

After the realization of PBS, a new Smoothing MEV scheme proposed by Ethereum developers aims to reduce the gap between the captured MEVs between each verifier. The ultimate goal is to make the reward distribution of each verifier as close to uniform as possible, so as to ensure the stability of protocol consensus. The potential destruction of MEVs is also considered.

The Verge -- Lowering the barrier to validation blocks

Key stage:

Verkle Trees: Optimizing Merkle trees around the Verkle tree design makes it possible for verifier to participate in verification by transaction without having to store all state.

Fully SNARKed: Fully introduced SNARK into the Ethereum protocol, such as EVM, Verkle proof, and consensus state transitions, to switch to quantum-secure STARKs even in the age of quantum computing.

The Purge -- simplify protocols, clear technical debt, and limit the cost of a verifier's participation in the network by purging historical data

The storage requirements of nodes are reduced by clearing historical data, or even eliminating the need to store all node data. There are two key targets: historical data expiration and status data expiration.

The Splurge - Continuous optimization fixes

The route is mainly a few piecemeal optimization fixes, such as account abstraction, EVM optimization, random number scheme VDF, etc.

Its main ideas are as follows:

(Key points of the road map, picture from the European YI Research Institute)

3.4 Key Solution Analysis

As mentioned in Section 3.2 above, the main problems to be solved by Ethereum at the present stage are MEV, state inflation and paving the way for Layer2. Ethereum proposes the following key solutions:

3.4.1 IP-4844 Introduces "blob" transaction types to reduce Rollup costs

Due to the current architecture of Ethereum, the data transferred by Layer2 to Layer1 is stored in the Calldata of transactions. However, Calldata as an argument to a function call is the data that all nodes must synchronize to download. It may be executed by Layer1 by default and requires synchronization of nodes across the network, which is the main factor causing the high cost of Layer2. In addition, if Calldata bloat, it will cause high load on Ethereum network nodes.

EIP-4844 introduces a new transaction type called "transaction with blob". This data type does not need to be synchronized across the network, but only needs to be accessed and downloaded by others in need within a certain period of time. Therefore, it is stored by nodes in the consensus layer, and will not be written into new blocks in the execution layer. This reduces the amount of data that previously had to be read by the backbone smart contract, increases the size of each block from tens of kilobytes to up to 2M per block, and also reduces the storage pressure on Blobs that have consensual nodes that are deleted after 30 days.

(Data comparison, picture from European Institute of Technology)

At the user experience level, the most intuitive perception of users is the significant reduction in Layer2 costs. This important improvement at the bottom will provide an important foundation for the explosion of Layer2 and its application layer.

3.4.2 Data Availability Sampling (DAS) -- Relieve nodes of the burden of verifying data availability

DAS (Data Availability Sampling) is a supporting data availability verification scheme. Its main idea is to prove the availability of a large data block probabilistically through certain mathematical design so that the verification node only needs to check part of the data fragments. There is no need for verification nodes to check the full amount of data. In this way, the performance requirements on the verification nodes are greatly reduced, ensuring adequate decentralization of the verification nodes.

3.4.3 PBS -- Role separation and MEV weakening during block creation

PBS (proposer-Builder Separation) is the separation of a ProPoSer and a proposer. This is a proposal to further solve the MEV problem.

In the PBS scheme, the outgoing block and transaction sequencing are separated: if the original node wants to participate in block packaging, the configuration requirements will be further raised and it will be transformed into a "packer". They bid for the right to pack the next block. When a block is produced, the validators make a list of available transactions, and the packers select some of them to generate blocks, and then bid for the right to package the next block. The system selects the final block player according to the principle of "the highest bidder wins", and obtains the bidding of the "packer" as the income. After the packer completes the packaging, the block still needs to be verified by all verifiers to determine whether it is legal and valid.

In this way, PBS weakens the power of the node, makes the quotation public, and the bribery chain of the arbitrageurs for MEV becomes longer, which can alleviate the MEV problem. But that doesn't solve the MEV problem.

3.4.4 Verkle Tree -- Optimize Ethereum's underlying data structure for faster verification and better performance

The function of Verkle Tree is the same as the Merkle Tree used by Ethereum now. It can store a large amount of data and generate a short Proof for any one or a group of data objects. As long as the root node of the tree structure is known, the proof can be verified. Verify that the data is actually stored on this tree.

In the Merkle tree, evidence of a value is the complete set of all sister nodes: a path forms from the root node to the target node, and all nodes that share the parent node with the nodes on that path must include it. As shown in the picture below:

(Merkle Tree structure, image from the web)

On a Verkle Tree, you don't need to provide the sister nodes, you just need to provide the path and add some extra data as evidence. As shown below:

(Verkle Tree structure, picture from the web)

This alone makes Proof several times smaller. For billion-scale data objects, a Proof is about 1 kb in a traditional Merkle Tree, but less than 150 bytes in a Verkle Tree. In addition, without the interference of sister nodes, the number of branches per layer of the tree can also be greatly increased, resulting in fewer tree layers and shorter verification paths. Such a big saving effect, can make its verification faster, better performance.

(Data comparison of Merkle and Verkle Tree, picture from EUI Research Institute)

3.4.5 IP-4444 -- Trim stored data

In response to Ethereum state bloat, EIP-4444 proposed that the execution-level client in PoS Ethereum should trim data over one year, instead of providing block header, block body, and receipt data over one year on p2p networks. Instead, the client can trim the historical data locally. This will greatly reduce the storage barrier for nodes and also ease future state inflation in Ethereum.

Iv. Opportunities, Risks and Prospects of Ethereum 2.0

4.1 Opportunities

4.1.1 Staking and mining are staking

Ethereum will be transformed from P0W to PoS mining, and the threshold for users to participate in mining will be lowered. Users only need to pledge 32 ETH to apply for being a verification node to participate in mining. Participating in verification transactions will also be eligible for rewards. However, to become a node, one must not only face high equipment and network requirements, but also have the knowledge reserve of the operating mechanism of the chain itself and the operation and maintenance ability. But for most coin holders, they don't have the time, energy or expertise to run nodes. Something else is Staking, offering a staking staking staking.

Because the centralized exchange naturally precipitates all kinds of PoS chain assets, and has relatively professional knowledge reserve and equipment resources, it occupies an advantage in the pledge operation service. In addition, exchanges can directly open the transaction of pledge derivatives to release liquidity for services, so at present, most mainstream centralized exchanges in the industry are ETH2.0 self-running node pledge service providers. Ouyi OKX provides the service of ETH2.0 lock-in mining node operator, which bears all the construction and maintenance costs of ETH2.0 nodes. Users can participate in this service with 0.1 ETH, and 100% of the on-chain income is distributed to users. ETH2.0 mining income is dynamically adjusted according to the amount of lock-in warehouse on the chain, and the estimated annual yield is between 4%-20%. The platform issues mining certificate BETH 1:1, and when ETH2.0 opens withdrawal, it can be converted back to ETH 1:1 according to the number of BETH held; In addition, BETH/USDT and BETH/ETH trading are open on the platform. When you do not want to hold BETH, you can sell it at any time, which is highly flexible.

(Eeth2.0 lock-in mining page)

4.1. 2 Layer2 Track project and related infrastructure take off

After Ethereum 2.0 turns to Layer2 route, Layer2 becomes an indispensable and extremely important part of 2.0 solution, bearing the responsibility of improving computing performance, improving efficiency and reducing cost. The Layer2 track project and related infrastructure will also see rapid growth.

Layer2 header project

The current situation of Layer2 expansion is that multiple expansion schemes coexist. Different Layer2 expansion schemes make different choices in terms of data and consensus mechanism, in fact, they make different choices in terms of security, performance, availability, and scalability, which determines that various Layer2 expansion schemes are suitable for different application scenarios. Different blockchain projects need to choose the most appropriate Layer2 expansion scheme according to the actual needs of specific businesses. There will be several head events on the track in the future.

In addition, various proprietary Layer2 networks may evolve. There are strong correlation and weak correlation between DApps and DApps. Strong correlation DApps may spontaneously gather on a certain chain that is most suitable for this kind of application, so as to gradually develop the chain into a special type.

Cross Layer2 protocol

Given that a single chain cannot carry all the applications of the Ethereum ecosystem, there is no interoperability between different Layer2 chains, which limits the composability of DApps on different Layer2 chains. Layer2 networks need to maintain interoperability, realize the interconnection between Layer2 protocols, and ensure the composability and fluidity of Layer2 protocol cross-Layer2 bridging network protocols will have a large market demand.

ZK mines

In Layer2's ZK scheme, how to improve the generation speed of ZK Proof will be a major problem that determines the future development of ZK Rollup. Currently, the most effective way to shorten ZK Proof generation time is to customize high-performance ZK accelerator chips and introduce incentives to promote competition between Prover nodes. ZK mining is likely to replicate the old path of bitcoin mining. The mining equipment will be constantly updated and iterated. The organization form will be dominated by mining pools, and ZK Rollup itself will benefit greatly from this change. However, ZK mining is a companion track of ZK Rollup that is still in the conception stage, and its development speed and market launch are highly uncertain.

4.2 Risks

4.2.1 Landing risk

Ethereum 2.0 is difficult to develop. Although the framework of Ethereum has been determined, many details are still being discussed and modified, and there is a risk of landing. As can be seen from the architecture diagram, the completion of Ethereum 2.0 requires several major technological innovations. As a platform developed for several years, Ethereum code structure has become very complex, and it is difficult to modify the underlying structure. Many factors need to be taken into consideration when modifying the original architecture.

4.2.2 Competition risk

According to the comparison data of public chain TVL, although Ethereum public chain still occupies the first place with 59% in the pie chart on the left, the area chart on the right clearly reflects that the proportion of TVL on Ethereum is declining and being nipped by other public chains.

(Public chain TVL image, image from defillama)

Many public chains are committed to solving the current expansion and performance problems facing Ethereum. Most of them are compatible with Ethereum code in the smart contract layer, which can allow developers to transfer to their own public chains in the fastest and most convenient way. Therefore, the competitive pressure facing Ethereum is very large. Time is running out for Ethereum 2.0 on the high performance public chain circuit.

4.2.3 Risks of node Centralization

Staking is an Staking staking staking staking. If the pie is limited, a project with a higher market share will be staking their staking and staking their staking. According to Dune data, Lidos account for the highest share of Ethereum pledged entities, occupying 29.2% of the market share, and the top 5 operators account for a combined 84.2%, which also arouses the concern of the industry on whether the Ethereum PoS mining is decentralized enough.

Staking staking (carrier share staking, Dune)

4.3 Outlook

4.3.1 Establish the industry position

Ethereum 2.0, if successfully implemented, will completely solve Ethereum's performance bottleneck. With its current largest ecological scale, lower Gas rates and faster transaction speeds, Ethereum will become an unbeatable presence in the public chain.

4.3.2 Promote ecological prosperity

Limited by the performance bottleneck of the underlying public chain, the blockchain cannot serve the entity application at present, and there are no DApps with more than tens of millions of monthly active users. If Taifang 2.0 is successfully implemented, it will be able to support large-scale commercial applications. At that time, it will surely enable the public chain to entities, boost the take-off of Web3, and create Dapps with tens of millions of users.

Author: Shirley, a researcher at the European and Electronic Research Institute