The Ethereum Foundation recently held its 11th Reddit AMA, discussing critical topics like Ethereum scaling, Lido's centralization concerns, PoS governance, parallel EVM, and Rollups opting for alternative Data Availability (DA) solutions. Here's a distilled overview of the key insights shared by Ethereum's core developers.
Scaling Ethereum: A Top Priority for 2024 and 2025
The immediate focus is on the Dencun upgrade, which introduces EIP-4844 to reduce Data Availability costs for Rollups. Initially, it will support up to 32 blobs per block (each blob is 0.375 MB), with plans to increase this capacity over time. Expanding Ethereum's data capacity is a cornerstone of the Foundation's strategy for the next two years. Future developments include PeerDAS and danksharding.
Additionally, a more direct scaling approach involves raising the Gas Limit. Ethereum co-founder Vitalik Buterin has suggested a moderate increase, noting that the limit hasn't been adjusted in three years. A potential raise to around 4 million (a 33% increase) is under consideration.
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Adjusting the Gas Limit requires careful consideration of multiple factors; it's not a parameter to be changed arbitrarily.
Separating Governance Power from Wealth
Many projects directly apply PoS consensus mechanisms to their governance models, like Polkadot and Tezos. However, this can lead to "pay-to-vote" scenarios, creating unfair governance dynamics. Ethereum developers advocate for decoupling power from wealth. Well-designed systems can empower individuals without being influenced by financial weight, reducing the "wealth equals control" factor.
PoS consensus should not be used in governance models; stakeholders shouldn't have special governance rights. Ethereum's governance relies on organic discussion and consensus-building, not ETH holdings. That said, PoS can still be utilized to make stakeholders (those with wealth) service providers with minimal power, such as nodes securing the network.
On-Chain Protocol Impacts
Lido: Centralization Isn't Sustainable Long-Term
Regarding Lido's centralization (it holds nearly 40% of staked liquidity), the Ethereum Foundation typically doesn't interfere with on-chain protocol development. Any corrective measures would require community consensus. Currently, no specific actions are planned to address Lido's market share.
The Foundation's role is to lower barriers to entry, potentially by protocol features that encourage more market participants. Developers aren't overly concerned, as internal assessments suggest Lido's dominance may not last. The approval of ETFs could attract stakers to alternative options, and custodians like Coinbase, Gemini, and BitGo may offer their own staking services.
EigenLayer: Emerging as Key Infrastructure
EigenLayer has become a significant narrative in Ethereum's ecosystem. Foundation members believe it could evolve into critical infrastructure, possibly serving as a shared sequencer for Rollups.
Like Lido, EigenLayer carries systemic risks. The primary concern is large-scale slashing events for ETH restaked on EigenLayer. The Foundation categorizes this risk into two types for evaluation:
- Legitimate Slashing: Node operators make genuine errors; market mechanisms can correct this.
- Illegitimate Slashing: Caused by contract bugs or other issues. EigenLayer's current solution involves a security committee to prevent systemic errors—a trade-off between safety and decentralization.
The Future of Rollups
Rollups Using External DA: A Threat to Ethereum
The question of Layer2s choosing alternative Data Availability layers (like Celestia or EigenDA) instead of Ethereum is a pressing community concern. Foundation members stated that L2s contribute to Ethereum by paying for data published as blobs.
If Layer2s opt for external DAs, Ethereum loses fee revenue (from on-chain data recording), which could diminish ETH's value and reduce network economic security. This might slowly lead to Ethereum's decline.
However, if Layer2s use ETH as their gas fee token, it could enhance ETH's utility and benefit Ethereum. Currently, the Foundation seems to lack a definitive solution, hoping EIP-4844 will incentivize Layer2s to stay.
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Rollup Fragmentation: Cross-Chain Composability Challenges
With the proliferation of Rollups, liquidity fragmentation across networks is increasing. Foundation members suggest that a "shared sequencer" and faster proof mechanisms could address this. A shared sequencer system for all Rollups and more efficient proof technology (like SNARKs) could enable native cross-Rollup composability without relying on bridges.
However, a universal sequencer requires trusted neutrality, security, pre-confirmations, and L1 compatibility. Technical hurdles remain: existing sequencers need to decentralize first, followed by decentralized sequencing solutions (e.g., Espresso). Progress will be gradual.
Parallelized EVM: Not a Priority for Ethereum L1
The trend of parallelizing the EVM, popularized by Monad and Sei, has sparked curiosity about its implementation on Ethereum. While parallelization can improve performance, Foundation members believe it's more likely to be experimented with on Rollups built atop Ethereum.
Whether Layer1 truly needs such high performance is debatable. Ethereum's roadmap already prioritizes Rollups for scaling, not enhancing the base layer itself.
Enshrined Rollups: The Ideal Future for Rollups
Enshrined Rollups (or "native rollups") are integrated into the Layer1 network's consensus. Most current Rollups operate with custom logic, but future developments might move toward equivalent EVM Rollups as a standardized upgrade path.
Frequently Asked Questions
What is the Dencun upgrade's main benefit?
The Dencun upgrade introduces EIP-4844, which reduces Data Availability costs for Rollups by introducing blob transactions. This lowers transaction fees on Layer2 networks and increases overall network capacity.
How does Ethereum's governance avoid wealth-based control?
Ethereum uses a community-driven process where decisions emerge from discussion and consensus among developers, researchers, and users—not through voting based on ETH holdings or stakeholder wealth.
Why is Lido's centralization considered unsustainable?
Market dynamics, including new entrants like ETF-based staking and major custodians offering services, are expected to diversify the staking landscape naturally over time, reducing reliance on any single provider.
What risks does EigenLayer pose to the ecosystem?
The main risk is large-scale slashing due to contract bugs or operational errors. EigenLayer mitigates this with a security committee, though this introduces a trade-off with decentralization.
Can Rollups use external Data Availability layers safely?
While technically possible, relying on external DAs reduces economic security for Ethereum and may fragment trust. Using Ethereum for DA aligns incentives and strengthens the overall ecosystem.
What is a shared sequencer?
A shared sequencer is a proposed system where multiple Rollups use a single, decentralized sequencing service. This could improve interoperability and reduce liquidity fragmentation across Layer2 networks.
Note: Cryptocurrency investments carry high risk due to price volatility. Investors could lose their entire capital. Always assess risks carefully.