Ups and downs: A review of Ethereum's changes and history in 2024

Written by: Tia, Techub News

The situation is turbulent, full of ups and downs, or perhaps "crisis lurks on every side"...

This year is an extraordinary year for Ethereum. There are the climaxes after the approval of the US spot ETF, as well as the crisis of facing competition from Solana and various "anti-Ethereum" remarks. In addition, there are personnel changes. A researcher joined Eigenlayer as a consultant and then resigned from the Eigenlayer position to better develop Ethereum. There are also the issues of Beam Chain and liquidity fragmentation raised at Devcon. All of these things highlight this extraordinary year.

Ups and downs in price action

From the Ethereum price chart, we can already see how many ups and downs it has experienced. From more than $2,000 at the beginning of the year to more than $4,000 in March, back to the beginning of $2, and then rising to more than $4,000 again, it is full of drama and uncertainty.

On January 11, 2024, documents from the U.S. Securities and Exchange Commission (SEC) showed that the SEC approved the listing of 11 spot Bitcoin ETFs. Riding on the momentum of ETFs and expectations for the approval of Ethereum ETFs, Ethereum has skyrocketed, with its price nearly doubling in just over a month.

On July 23, the US spot Ethereum ETF was launched. Although the trading volume of the spot Ethereum ETF was hot after the launch, and the trading volume exceeded 200 million US dollars in just 45 minutes, the price increase in the first half of the year has already included the expectation of issuing the Ethereum ETF. The US spot Ethereum ETF did not achieve an excessive increase after its launch.

Since there is no sustainable innovation in the industry to support high prices, after the Ethereum price soared, it began to fall wildly again in August. Starting from July 30, the Ethereum price began to fall for 7 consecutive days. It fell from a high of $3,366 to a low of $2,111. After that, it was a long sideways trend.

Until President Trump won the election, Ethereum continued to rise from a low of $2 to a high of $4,170.

The frequent 7-day declines and 7-day rises, as well as the roller coaster-like rise and fall, reflect the extremely high volatility of the crypto market, and also show the emotions, expectations and external events of market participants. (Yes. This is crypto 🕶️)

Behind the rise and fall is a series of iron logic that we have to admit. For example, the sharp rise in the expectation of the listing of Ethereum ETF after the approval of Bitcoin ETF at the beginning of the year, the waterfall-like decline back to the starting point caused by the inability of ETF alone to continuously drive an industry lacking real innovation and lasting market demand; and the crazy rise due to the optimism about cryptocurrencies after Trump took office...

Looking back at the price trend of Ethereum, it is not difficult to find that its ups and downs are not only driven by external macro factors, but technological progress often plays an important role in it. From the launch of Ethereum 2.0, to the implementation of Layer2 scalability solutions, to the continuous optimization and update of the Ethereum network, every technological breakthrough has become the focus of the market. However, the gains brought about by these advances are not achieved overnight, but are often obscured by short-term market sentiment.

Beam Chain, Dencun upgrade, Pectra upgrade and other EIPs

Beam Chain

Beam Chain was proposed by Justin Drake, an Ethereum researcher, at Devcon in Thailand. Beam Chain is Justin's proposal to redesign the Ethereum consensus layer. This proposal is a further upgrade of Beacon Chain, with the main goals of MEV, lowering the staking threshold, achieving fast finality single slot finality, and ZKing the entire consensus layer. This proposal, riding on the breakthrough of SNARK technology, is equivalent to an upgrade of the old Beacon Chain design from 5 years ago.

Dencun Upgrade

The Ethereum Dencun upgrade was launched on March 13, 2024. The hard fork combines two core improvements: the Deneb consensus layer and the Cancun execution layer update. The highlight of the upgrade is EIP-4844 Proto-danksharding. Rollup can send data such as transactions and proofs to Layer1 in the form of blobs. Since blobs are temporary storage and access to off-chain data, using blobs will make the cost of Rollup much lower than the original calldata. However, this also caused a significant drop in Ethereum revenue.

EIP-4844 is a controversial EIP. In the short term, it is indeed the reason for the sharp decline in Ethereum's revenue and one of the main reasons why Ethereum is criticized; but some people also call this EIP "a small step for Sharding, a big step for Ethereum's expansion". In the long run, its specific impact is still unknown.

The Dencun upgrade also includes some EIPs that improve the efficiency of Ethereum, such as EIP-7516, EIP-6780, EIP-5656, EIP-1153, etc. The specific EIPs included in the Dencun upgrade are detailed in the table below.

Pectra Upgrade

The Pectra upgrade combines two separate upgrades: the Prague execution layer upgrade and the Electra consensus layer upgrade. The Pectra upgrade is an upgrade before the Fusaka upgrade (specifically for implementing the Verkle transition). Since Ethereum developers agree that no other substantive changes can be combined with Verkle, the Pectra upgrade is a series of other changes before implementing the Verkle transition. The Verkle transition represents the migration of all Ethereum state data from the Merkle Patricia tree structure to the Verkle structure. This will enable nodes to generate smaller proofs about state data, making it easier to pass them to other nodes, and is a prerequisite for implementing "stateless clients."

The Pectra upgrade is initially scheduled to be activated on the mainnet in early 2025. Among them, the more important one is the account abstraction EIP-7702, whose main function is to extend the smart account function to EOA.

EIP-7702 is an improvement of EIP-3074 , proposed in May 2024. EIP-3074 is the community's first attempt to explore the extension of smart account functions to EOA. Unlike ERC-4337 ( which introduces a smart contract called EntryPoint so that the smart contract can behave like a user's account ), if ERC-4337 is a way to implement account abstraction without changing the execution layer or consensus layer, EIP-3074 requires an Ethereum hard fork to implement. It mainly extends the smart account function to EOA by introducing two opcodes - AUTH and AUTHCALL.

EIP-7702 is a step further than EIP-3074. Unlike EIP-3074's opcode implementation of EOA's smart account model, with EIP-7702, EOA can now store an address called a "delegate indicator" that points to a smart contract. When a transaction is sent to EOA, it can execute the code on this specified address as if it were its own code, similar to how "delegate calls" work in smart contracts.

While bringing smart account functionality to EOA, EIP-7702 addresses many of the concerns raised by EIP-3074, provides full compatibility with ERC-4337 and a clear upgrade path, and is planned to be included in the Pectra upgrade.

Since the focus will shift to Verkle Tree after the Pectra upgrade, EIP-7702 may be the last EIP for account abstraction related upgrades, because after this, there may not be another 2-year window to include account abstraction related upgrades.

So far, other code changes to Pectra have mainly included improving the experience for users and smart contract developers. For a more detailed introduction to Pectra upgrades, please refer to this article .

Other EIPs

Not all EIPs that have passed the review need to be used after the hard fork upgrade. Ethereum has also passed some major process/standard EIPs this year, such as the cross-chain intention standard ERC-7683 and the account abstraction standard ERC-4337 (ERC is a subset of EIP). Such changes rely more on the community's recognition of the EIP, that is, whether the community is willing to accept or actively implement it. Some EIPs that need to be used after the hard fork upgrade also need to wait for the acceptance of users, DApps, etc. before they can be widely adopted.

Interoperability: Cross-chain/Rollup Standards

With Ethereum's Rollup-centric roadmap and the growing number of various Layer1s, on-chain liquidity is fragmented and the composability, one of the biggest advantages of the chain, is gradually lost with the fragmentation.

There are two levels of problems that need to be solved for interoperability: one is how to achieve fast, low-cost and secure cross-chain assets, and the second is how to achieve synchronous composability.

At present, there are many protocols that can solve the first gradient problem. Protocols like Across have greatly improved the cross-chain speed and have low fees. Due to its intent-based architecture, the security issues of user cross-chain have also been completely transferred to the solver. At present, some proposals related to cross-chain/Rollup are mainly committed to solving some preliminary standard issues.

Synchronous composability will be subsequently transferred to Based Rollup for implementation. Specific proposals on cross-chain/Rollup are as follows:

ERC-7683

ERC-7683 is an intended cross-chain standard jointly proposed by Across and Uniswap. Through this standard, all intended interoperable orders can share the solver network.

ERC-7683 combined with ERC-3668 and ERC-3770 will bring initial interoperability experience to L2. ERC-7683 creates a unified framework for cross-chain intentions, which can be accessed by all solvers; EIP-3370 adds identification tags to blockchain addresses, clarifies the specific blockchain network to which the address belongs, and prevents users from sending money to the wrong network; ERC-3668 CCIP Read completes the off-chain verification well, providing a secure mechanism for obtaining off-chain data without additional trust assumptions, which will effectively and automatically support light clients compatible with L2 blockchains without any additional configuration of wallets.

RIP-7755 (L2 calling standard)

RIP-7755 is an L2 calling standard. The POC was launched by the Base research team on October 17th. It aims to achieve seamless cross-chain interoperability between different Ethereum Layer2 networks, especially mainstream second-layer networks such as Optimism and Arbitrum. The proof of concept of RIP-7755 is applicable to blockchains that comply with the EIP-4788 standard. Currently, it can verify the status of the OP Stack chain and Arbitrum.

summary

The above is an overall review of the major events that Ethereum experienced in 2024. Of course, the journey of Ethereum in 2024 is far more than that. It also includes the dispute with Solana, criticism of unclear positioning and centralization, large institutions began to hold Ethereum spot ETFs (Michigan Pension Fund disclosed that it holds more than $10 million in Ethereum spot ETFs), large institutions launched tokenized products on Ethereum (UBS launched uMINT, a tokenized money market fund based on Ethereum in Singapore, and Wall Street giant Guggenheim tokenized $20 million in commercial paper on Ethereum), and after facing the crisis, V God published 6 articles on the Ethereum roadmap, and conducted AMA answers on Ethereum Research Reddit, etc....

And in the end, everything points to an unresolved question: where is the future?