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Ethereum Roadmap Update

The merger was a major technological refresh that took six years to complete. A layman may not fully understand the ambitions of the Ethereum core team.

The Messari report examines these stages of development in the roadmap.

The Merge: The Merge moves from Proof-of-Work to Proof-of-Stake consensus. Investors can now exit the staking contract, and developers are working to ensure an even distribution of transaction validation. Other more complex tasks are also in progress.

The Surge: By introducing a new type of Ethereum transaction called"blobs", which will have a designated block space allocation to publish their data, with the goal of reaching 100,000 transactions per second. Blobs will be introduced in the first form in EIP-4844, also known as"Proto-Danksharding". Fees on L1 and L2 should be reduced while attacking Ethereum's implementation of data availability sampling, the full form of which is called"Danksharding"。

The Scourge (disaster): This is a new step that was just added (according to Vitalik's tweet), mainly in response to community comments on maximum extractable value ("MEV") will lead to concerns about transaction review (more on this later). Additionally, all blob transactions are fully sharded.

The Verge (The Verge): "Fully SNARKed Ethereum" promotes Ethereum having extremely efficient and trustless block verification, and introduces Merkle trees, which are smaller than their cryptographic counterparts. This opens the door for mobile clients on Ethereum.

The Purge: This included many small code cleanups, reduced network costs, simplified the Ethereum protocol, and got rid of technical debt. Increase performance while cutting costs.

What Vitalik said"fix everything else"It's The Splurge. These include"quantum security"first level title

merger economics

The merger marks a major change in Ethereum's business strategy. By switching to a PoS consensus mechanism, the mechanism’s environmental impact has been reduced by more than 99%, making Ethereum an even more attractive investment target for organizations interested in environmental, social, and corporate governance (ESG). Additionally, it reduced Miner’s sell pressure of nearly $500 million per month and reduced new token issuance by 90%. Finally, due to the fee burning mechanism implemented by Ethereum in EIP-1559 in August 2021, it becomes a net deflationary asset with real yield.

Since EIP-1559 went live last summer, the Ethereum system has "burned" around 85% of all transaction fees, leaving the remaining 15% as"tip"Assigned to Miner. If the transaction fees burned are greater than the network's issuance rate, Ethereum's supply will become net deflationary. Depending on the demand for block space, we believe the network could experience steady-state deflation of 1% to 2% per year. No other cryptoasset project can accomplish these supply dynamics.

The yield in 2023 may be between 5-7%, establishing a financial system for Ethereum"risk free rate", depending on the number of active participants on the network and the level of network activity.

This yield curve has already begun to be constructed for investors in some DeFi protocols to track.

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Maximum extractable value and censorship

Maximum extractable value, or for short"MEV", is one of the most intriguing technical puzzles of all cryptoassets, and it has attracted some of the greatest technical and financial minds in the industry to solve its puzzles.

In short, MEV is the result of a power dynamic between network users and the blockchain's security providers (miners and validators). Users may be charged by security providers who decide the order of transactions and which transactions are included in each block.

In some respects, MEV may be seen as a feature rather than a problem, since it exists on every blockchain.

MEV may improve the anti-fragility, efficiency and liquidity of the protocol. Most of the MEV incentives will be allocated to Token holders who hold MEV, and the powerful MEV sub-economy will ensure the smoothness of transaction processing."supply chain"Separation of block proposers (owners) and block builders (experts) in a world-wide, decentralized manner.

Flashbots, one of the top MEV R&D firms, proposes a system to classify different MEVs according to their potential externalities and value accumulation. If we can develop systems that account for specific kinds of "bad" MEVs, future protocols that socialize the benefits of MEVs could be fairer.

What is Buterin excited about this year?

• Stablecoins that preserve privacy and peg to traditional assets

• Vitalik loves to predict the DeFi market. But Vitalik also admits that he doesn't expect them to be "billion-dollar moves," so maybe this is purely academic interest.

• Concepts such as identity module authentication (for authority authorization on Ethereum), name (ENS), proof (decentralized social), and proof of humanity are at the core.

• DAOs, which he categorizes as stable, efficient, or interactive decentralized communities.

• Applications that combine blockchain technology with non-blockchain technologies, such as voting,"Cross-chain bridge"wait.

Cross-chain bridge

According to the Messari report, one of the three most important areas of future development is the interoperability of blockchains and bridging protocols.

A hack from Axie's Ronin"side chain"$600 million was stolen. Wormhole’s ETH-SOL bridge lost $320 million and Nomad lost $200 million. The current cross-chain bridge has shown its vulnerability.

Rollups are essentially blockchains that have built-in value cross-chain bridges and settle transactions between EVM chains. As the name suggests, Rollups is the blockchain that processes its transactions, but as the name suggests, "rolls up" to Ethereum and leverages Ethereum's strong security for settlement.

Buterin revealed why he thinks cross-chain bridges are less sensible, revealing that "there are fundamental limitations to the security of bridges spanning multiple 'sovereign zones'" and that the argument for modular blockchains is that "you cannot pick and choose individual Data layer and security layer. Your data layer must be your security layer."

According to Messari's report, L1"Blockchain Wars"first level title

Rollups and modularity

Rollups improve blockchain scalability by processing transactions on different blockchains. Transaction data is published and compressed to an underlying L1. With the release of Arbitrum and Optimism Layer-2s in 2021, traditional Rollups that rely on Ethereum L1 for data availability, consensus, and settlement are listed first.

The popular theory of "modularity" in 2022 was proposed by newcomer Celestia. The role of traditional Rollup is to process transactions and rely on Ethereum to settle, verify and store their data, but modularity enables developers to choose how their protocol handles each step.

There are two classifications for Rollup. It can be divided into smart contract Rollup and sovereign Rollup.

Smart Contract Rollups: Smart contracts on L1 use various types of"prove"Examine batches of compressed transactions, which are packaged into L1 as they depend on final approval of the smart contract. Smart contract Rollups are divided into two types: Optimistic Rollups and Zero Knowledge Proof Rollups (ZK Rollups).

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Similarities to Solana

According to Messari, a segmented approach with different layers could be more effective for scaling the blockchain ecosystem than wrapping transaction execution, settlement, network consensus and data availability on a single main chain. This is comparable to the microservices architecture used in traditional application development.

Messari went on to list some of the conditions that an alt-L1 like Solana needs to have in order to compete with other modular blockchains.

• The continuous development of algorithms will reduce the operating costs of large nodes

• Rollup Delays or Securities Issues

• User Choice and Expertise

• Product-Market Fit of Application Chain

• User tolerance for centralization and MEV

The report also delves into Solana’s relationship with the now-defunct trading platform FTX, and how it affected Solana. In elaborating on this point, the report shows that SOL and SRM are a significant part of FTX’s financial statements based on bankruptcy records. FTX, Alameda, and some of the closest investors were active, enthusiastic supporters of the early Solana ecosystem. However, the Solana team and its founding community were keen to take"eat glass"The state of mind may recover again after this turmoil passes.

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Cosmos and Lisk

The Cosmos community is trying to create a"ATOM 2.0 "The new era of , which seeks to establish the Hub as the primary data router and source of security for Cosmos. According to a report from Messari, with developers discussing ATOM 2.0, Cosmos will likely continue to be"sovereignty"A leading ecosystem for Lisk developers. This bold attempt faced resistance as the request to adopt ATOM 2.0 was rejected by the community.

The ecosystem is attractive to those with the technical know-how to vertically integrate their applications, as Cosmos gives developers the freedom to create their chains with the flexibility they need. IBC also gives Lisk access to value accumulation mechanisms (MEV, transaction fees, etc.). Take DYDX as an example, it switched from ZK-rollup to application chain last year, which may be the largest application of encrypted assets.

Sei and Canto are two new L1s built on the Cosmos SDK with a focus on DeFi applications, both created in 2022. Sei has a parallel order matching engine and an integrated central limit order book (CLOB). Messari claims that Sei aims to become the Nasdaq of the crypto-asset world, with its centralized order book mechanism and shared liquidity making it ideal for DeFi use cases. Canto recently launched an EVM-compatible L1 with built-in core protocols such as AMM DEX, lending protocols, and stablecoins. It intends to make these base protocols freely available to users and developers.

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L1 of other chains

Cardano: Cardano saw major technological advancements in 2018, including Plutus smart contract functionality and the Vasil hard fork, improvements to Plutus and greater scalability. But so far, Cardano has not been able to match the larger ecosystem in terms of transaction volume (transactions, TVL, and development activity). According to Messari, 2023 is a crucial year for Cardono.

Polygon: The Roll Up and Modular part encompasses many different parts that Polygon has gone through. In Q3, they hit all-time highs in terms of active addresses and NFT wallets. Additionally, they have one of the top BD teams in the cryptoasset industry, a team that has signed deals with Reddit, Meta, and Starbucks this year.

Polkadot: The interoperable"chain in chain"Similar to a merged ethereum, this should come as no surprise since Polkadot creator Gavin Wood is also a co-founder of ethereum and its technical architect.

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MOVE-blockchain development language

Facebook's abandoned Diem project spawned Aptos and Sui. Aptos and Sui come from a top-notch engineering team, inheriting years of R&D and partnership negotiation skills. Move is their new smart contract development language developed from Rust, designed to give programmers more control over their data management and safer execution. Both projects advertise themselves as high-speed, highly scalable chains (they decouple consensus, parallelize transaction processing, and complete transactions in under a second). These projects all have strong teams, supporters and networks behind them.

Early deployments of Aptos ran into issues, and Sui is still only accessible on the testnet. According to Messari, Sui may encounter kickback issues as FTX enters bankruptcy and liquidation. Of the $350 million that Aptos has raised this year, FTX Ventures admitted to donating $75 million, but the deal took longer than the typical 90-day bankruptcy recovery period. And Sui's $100 million is another story. It appears that a third of Sui's $300 million in funding in the third quarter came before the 90-day clawback period. 2023 will prove that FTX's liquidation has a significant impact on the crypto world.