May 2024 – EIPs and The State of The Ethereum Ecosystem

  1. Introduction
  2. Understanding EIP-7702 and Its Impact
  3. Vitalik Buterin’s Ideas and Recent EIPs
  4. Comparing Ethereum with Other Leading Blockchains
  5. Analysing Proposed Architectural Changes and Upcoming Ethereum Upgrades
  6. Conclusion: What’s Ahead for Eth


As of mid-2024, the Ethereum ecosystem continues to evolve at a rapid pace, characterized by significant technological advancements, robust community engagement, and a focus on long-term sustainability and security. Over the past few months, Ethereum has seen a surge in adoption, driven by improvements in scalability and user experience.The successful implementation of the Shanghai upgrade, and the Cancun-Deneb Hard Fork (which also realised EIP-4844, also known as Proto-Danksharding), have introduced various enhancements including the long-anticipated shift to Proof of Stake, has positioned Ethereum as a leader in the blockchain space. As a result of these upgrades, rollups have become 100x cheaper, transaction volume on rollups increased by more than 3x, and the theoretical maximum block size was only increased slightly: from ~1.9 MB to ~2.6 MB.

Vitalik Buterin, Ethereum’s co-founder, has been actively proposing innovative ideas to address ongoing challenges and enhance the network’s capabilities, including the aforementioned improvement in Multidimensional Gas Pricing. Recently, he has emphasised the need for Ethereum to achieve mainstream adoption within the next five years, highlighting the importance of user-friendly interfaces, lower transaction fees, and scalable solutions. Buterin has also been advocating for renewed exploration into Plasma-based scaling solutions to complement existing Layer 2 technologies such as rollups and sharding. These efforts are part of a broader strategy to ensure Ethereum remains competitive in an increasingly crowded blockchain landscape. Among the recent proposals, Buterin has introduced a novel approach to decentralisation and staking, aimed at reducing validator centralization and promoting a more secure and decentralised network. His focus on account abstraction and enhanced user experience through the EIP-7702 proposal reflects his long-standing genius and crusade towards making Ethereum consistently more accessible and secure for users and developers alike. These initiatives are critical as Ethereum continues to expand its ecosystem, integrating new technologies and fostering innovation across various sectors.

Understanding EIP-7702 and Its Impact

The EIP-7702 proposal, introduced by Vitalik Buterin, represents a significant step forward for Ethereum in terms of account abstraction and user experience. This proposal aims to enhance the functionality of externally owned accounts (EOAs) by incorporating advanced features typically associated with smart contracts. By enabling complex operations directly within user accounts, EIP-7702 simplifies interactions with the Ethereum network, making it more accessible to non-technical users while offering powerful tools for developers.

One of the key advantages of EIP-7702 is the ability to support multi-signature wallets, which require multiple approvals for transactions, enhancing security. Additionally, it introduces social recovery mechanisms, allowing users to recover their accounts through trusted contacts in case of lost private keys. This feature addresses a common pain point in the crypto space, where losing access to private keys can result in the permanent loss of funds. For developers, EIP-7702 reduces the complexity of building decentralised applications (dApps) by providing a more streamlined and flexible framework for managing user accounts. This simplification not only lowers development costs but also accelerates the deployment of new applications, fostering innovation within the Ethereum ecosystem. Moreover, by improving user experience and security, EIP-7702 is expected to drive broader adoption of Ethereum-based applications, contributing to the network’s growth and sustainability.

Vitalik Buterin’s Ideas and Recent Ethereum Improvement Proposals (EIPs) : An Overview

Over the past year, Vitalik Buterin and many prominent Ethereum Developers have put forward several crucial proposals aimed at enhancing various aspects of the Ethereum network. Here is an overview of some of the most impactful proposals and their underlying EIPs:

1. Account Abstraction via EIP-7702 

This proposal focuses on improving user experience by integrating advanced account features directly into Externally Owned Accounts (EOAs). It introduces functionalities like multi-signature support and social recovery, making Ethereum more secure and user-friendly. One of the most significant proposals is the implementation of account abstraction through EIP-7702. The primary goal of EIP-7702 is to make Ethereum more secure and user-friendly, addressing long-standing issues with account management and security. EIP-7702 introduces functionalities like multi-signature support and social recovery directly at the account level. Multi-signature support allows for the creation of accounts that require multiple signatures to authorise transactions, significantly enhancing security for high-value accounts or shared wallets. This feature is particularly valuable for institutions and Decentralised Autonomous Organisations (DAOs) that require multiple approvals for financial decisions. Social recovery, another key feature of this proposal, provides a safety net for users who lose access to their private keys. It allows users to designate trusted contacts who can help recover account access, reducing the risk of permanent fund loss due to lost or compromised keys. This feature addresses one of the most significant barriers to widespread blockchain adoption – the fear of irretrievably losing access to funds. By integrating these advanced features directly into EOAs, EIP-7702 eliminates the need for complex smart contract wallets, simplifying the user experience while maintaining high security standards. This smoothens the journey of making Ethereum more accessible to a broader audience, including those less familiar with blockchain technology and those that have been deadlocked into analysis-paralysis pertaining to issues like losing wallet keys.

2. Decentralised Staking and Anti-Correlation Incentives

To address validator centralization, new incentives are designed to promote a more diverse and decentralised validator set. These incentives aim to reduce correlated behaviours among validators, enhancing the network’s security and resilience. The concept of anti-correlation incentives is rooted in the idea that a truly decentralised network should have validators acting independently rather than in large, coordinated groups. By incentivizing diversity in validator behaviour, the proposal aims to make the network more resistant to coordinated attacks or failures. The goal is to create a validator ecosystem where no single point of failure can significantly impact the network’s operation. By encouraging a wider range of participants in the staking process, Ethereum aims to distribute power more evenly across the network, further enhancing its decentralisation and security.

3. Quantum-Resistant Cryptographic Algorithms

In response to the potential threat posed by quantum computing, Buterin advocated for integrating quantum-resistant algorithms into Ethereum’s security infrastructure. While large-scale quantum computers capable of breaking current cryptographic standards are not yet a reality, the development of such technology could potentially compromise the security of blockchain networks. By beginning to implement quantum-resistant algorithms now, this pro-active approach ensures that Ethereum is positioning itself to be resilient against future technological threats. This proposal involves researching and implementing post-quantum cryptographic techniques, such as lattice-based cryptography or hash-based signatures. These methods are designed to be secure against both classical and quantum computing attacks, providing a long-term security solution for the Ethereum network. The integration of quantum-resistant algorithms would likely be a gradual process, starting with optional features and eventually becoming a core part of Ethereum’s cryptographic infrastructure. This transition would need to be carefully managed to ensure compatibility with existing systems while providing enhanced security for the future.

4. Plasma-Based Scaling Solutions

Vitalik Buterin and other developers advocated for renewed exploration into Plasma-based solutions to complement existing scalability technologies like rollups and sharding for complementing L2s for greater ecosystem malleability. Plasma chains process transactions off-chain before finalising them on the main Ethereum chain, reducing congestion and increasing throughput. This technology allows for the creation of child chains that can handle specific types of transactions or applications, offloading work from the main chain while still benefiting from its security. The renewed interest in Plasma technology comes from the recognition that a diverse set of scaling solutions is necessary to meet the varied needs of different applications and use cases. While rollups have become a primary focus for Ethereum scaling, Plasma chains offer unique benefits in certain scenarios, particularly for applications requiring high transaction throughput with minimal on-chain footprint. By combining Plasma with other scaling technologies, Ethereum aims to create a more robust and flexible ecosystem that can adapt to diverse application requirements. This multi-pronged approach to scaling reflects the Ethereum community’s commitment to finding comprehensive solutions to blockchain scalability challenges.

5. Pectra Upgrade (Q1 2025)

The Pectra upgrade, aimed at institutional stakers and wallet UX improvements, was introduced to enhance the staking experience for institutional users. This upgrade also includes significant improvements in wallet user experience, which will make it easier and more efficient for users to interact with the Ethereum network. This upgrade is set to go live in Q1, 2025. For institutional stakers, the Pectra upgrade aims to streamline the staking process and provide more robust tools for managing large-scale staking operations. By catering to the needs of institutional players, Ethereum hopes to attract more significant capital and expertise to its staking ecosystem, further strengthening the network’s security and decentralisation. On the wallet UX front, the Pectra upgrade promises to make interacting with the Ethereum network easier and more intuitive for all users. The focus on wallet UX improvements is crucial for Ethereum’s goal of mainstream adoption – by making it easier for average users to navigate the Ethereum ecosystem, the network can become more accessible to a broader audience, potentially driving greater adoption and usage of Ethereum-based applications.

Key EIPs in 2024

Ethereum Improvement Proposals (EIPs) are crucial for the development and evolution of the Ethereum blockchain. In the past year, Vitalik Buterin has been actively involved in proposing several key EIPs that aim to enhance the network’s scalability, efficiency, and usability. The Ethereum ecosystem continues to evolve rapidly, with numerous Ethereum Improvement Proposals (EIPs) driving innovation and scalability. EIP-3074, introduced in early 2023, paved the way for universal smart contract wallets by allowing regular accounts to temporarily operate as smart contracts.

This simplified development and leveraged existing patterns. Building on this, EIP-7702 (April 2024) proposed a new transaction type for temporarily converting regular accounts to smart wallets, designed for forward compatibility with full account abstraction. Scaling solutions were a major focus, with EIP-4844 (March 2024) reducing data storage overhead for layer-2 networks through temporary “blob” data. This proto-danksharding approach enables cheaper transactions as a step towards full danksharding.

EIP-4788 (April 2024) further enhanced layer-2 rollup scaling by allowing rollups to use blob space instead of call data for cheaper cryptographic proof submission. EIP-1153 (April 2024) introduced transient storage opcodes for more efficient data storage, crucial for layer-2 development and proof submission costs. Smart contract upgradability and flexibility were also priorities. EIP-5656 (April 2024) proposed efficient memory ops mechanisms for seamlessly upgrading contracts without disrupting functionality. EIP-6900 (March 2024) defined a modular plugin system for building customizable smart contract accounts, expanding on the account abstraction foundations of ERC-4337. 

The Ethereum Virtual Machine itself got an upgrade path with EIP-6780 (April 2024) for evolving the EVM without breaking existing contracts. Vitalik emphasised his excitement for Verkle Trees, which will be implemented as part of Ethereum’s next hard fork, Pectra. Buterin noted that technical barriers are persistently cited as a major factor discouraging ETH holders from staking. He also emphasised that the future introduction of zk-SNARKs will reduce the data burden for nodes even further. And while EIP-3074 is more focused on delegating transaction control to smart contracts, EIP-7702 is designed to enhance the functionality of EOAs by allowing them to temporarily act as smart contract wallets. These EIPs have received positive reviews from the community and developers, and have created a foundation comprising of synchronous, reinforcing and yet diversified approaches to enhancing the Ethereum ecosystem, and a majority of these cutting-edge proposals will be enacted in the forthcoming Pectra Upgrade.

Comparing Ethereum with Other Leading Blockchains

Ethereum’s current architecture, while robust and feature-rich, faces competition from other leading blockchains like Solana, Polkadot, and Cardano. Each of these platforms offers unique advantages in terms of performance, scalability, and future-proofing. Here, we compare Ethereum with these blockchains across several crucial parameters.

Performance and Scalability

Solana is renowned for its high throughput, capable of processing thousands of transactions per second (TPS). This performance is achieved through its unique Proof of History consensus mechanism, which reduces the time required for transaction validation. In contrast, Ethereum’s current TPS is lower, though it is significantly improving with the adoption of Layer 2 solutions and sharding. The planned implementation of rollups and Plasma-based scaling solutions is expected to further enhance Ethereum’s scalability, allowing it to handle increased transaction volumes effectively. Polkadot’s parachain architecture also offers impressive scalability by enabling multiple blockchains to operate in parallel. This interoperability allows different chains to communicate and share information seamlessly, creating a cohesive ecosystem. Ethereum’s interoperability efforts, while progressing, still lag behind Polkadot’s inherent design advantages. However, Ethereum’s extensive developer community and mature ecosystem provide a strong foundation for future improvements.

Security and Decentralization

Ethereum’s transition to Proof of Stake (PoS) has significantly enhanced its security and reduced its energy consumption compared to the Proof of Work (PoW) era. This shift aligns with the growing emphasis on sustainable blockchain solutions. Cardano, which uses the Ouroboros PoS protocol, also emphasises security and sustainability, offering a highly secure and energy-efficient blockchain platform. Polkadot’s Nominated Proof of Stake (NPoS) consensus mechanism combines aspects of PoS with additional layers of security, promoting a decentralised and secure validator set. Ethereum’s ongoing efforts to implement decentralised staking and anti-correlation incentives are crucial in maintaining and enhancing its security framework. These initiatives aim to prevent validator centralization and promote a more distributed and resilient network.

User Experience and Developer Support

Ethereum’s extensive developer community and comprehensive documentation provide a strong foundation for dApp development. The EIP-7702 proposal and other recent improvements aim to simplify user interactions and enhance the overall user experience on the network. In comparison, Solana’s high performance and low fees make it attractive for developers focused on DeFi applications, though its developer ecosystem is still maturing. Cardano’s emphasis on formal methods and peer-reviewed research provides a unique approach to blockchain development. This rigorous methodology ensures high-quality and secure code, appealing to developers who prioritise security and reliability. However, Ethereum’s broad adoption and diverse range of tools and frameworks continue to make it the preferred choice for many developers.

Interoperability and Ecosystem Integration

At one point in the development history of blockchain, Ethereum’s scalability limitations led to the development of various layer 2 scaling solutions, an innovation which has proved invaluable for widespread blockchain interoperability. Ethereum developers also championed the heralding concepts of blockchain like Smart Contracts and the Ethereum Virtual Machine (EVM). In that regard the EIP-3074 proposal introduced new opcodes that could enable features like atomic composability, allowing for more complex interactions between smart contracts. Polkadot’s focus on interoperability sets it apart from Ethereum. Polkadot’s parachain architecture allows different blockchains to communicate and share information seamlessly. This capability is crucial to Polkadot for creating a cohesive blockchain ecosystem where various platforms can interoperate without friction. Ethereum is itself on the verge of a host of interoperability solutions tailored to it’s architecture.

Energy Efficiency

With the shift to Proof of Stake, Ethereum has significantly reduced its energy consumption compared to the Proof of Work era. The Merge reduced Ethereum’s energy consumption by an estimated 99.95%, making it significantly more environmentally friendly than its PoW predecessors. However, some blockchains, such as Algorand and Cardano have been built from the ground up with energy efficiency in mind. These platforms utilise consensus mechanisms that require minimal energy, positioning them as environmentally friendly alternatives to traditional blockchains. Ethereum’s ongoing improvements in energy efficiency demonstrate its progress with regards to sustainability, but there are chains with mechanisms whose efficiency is that of Ethereum times manifold, and a lot of catching up is there to do for the most worked-upon chain in the world.

Analysing Proposed Architectural Changes and Upcoming Ethereum Upgrades

Gas Model Overhaul

One of the most pressing issues facing Ethereum users has been the unpredictable and often exorbitant gas fees during periods of high network congestion. Vitalik Buterin’s proposal to overhaul Ethereum’s gas model aims to introduce a more predictable and fair fee structure. By decoupling gas fees from network congestion, the new model provides stable transaction costs, reducing the volatility that has often plagued Ethereum users. The introduction of a two-tiered system – base fees and priority fees, which adjust dynamically based on network activity, ensures that transaction costs remain reasonable and predictable. Base fees would be algorithmically determined based on network activity and would be burned (removed from circulation) rather than paid to miners. This mechanism helps to control the overall supply of Ether, potentially making it deflationary over time. Priority fees, on the other hand, would be optional tips paid directly to miners to incentivize faster transaction processing. This change benefits both users and developers, as it simplifies transaction planning and reduces the likelihood of failed transactions due to sudden fee spikes. For developers, a more predictable fee structure lowers the barriers to entry, encouraging the development of new applications and services on the Ethereum network. By smoothing out fee spikes, the network becomes more usable during periods of high congestion. It aims to create a more efficient gas market that incentivizes miners to prioritise transactions while discouraging spam and unnecessary network congestion.

Quantum Resistance

To protect Ethereum from future quantum computing threats, Buterin proposed integrating quantum-resistant cryptographic algorithms into the network. Quantum computers, with their immense computational power, could potentially break current cryptographic methods, and compromise the cryptographic foundations of many blockchains, which is an ever-increasing threat as interoperability and cross-chain interactions in a more ‘universal’ blockchain future can mean unpredictable outcomes in case such an adverse event occurs. Ethereum’s Quantum Resistance initiative aims to implement quantum-resistant cryptography to protect user assets and maintain the network’s integrity. This involves researching and implementing post-quantum cryptographic techniques, such as lattice-based cryptography or hash-based signatures (Hash based signature schemes are a type of digital signature scheme that use hash functions as their central building block – they are efficient and flexible, and can be used in a variety of applications). These methods are designed to be secure against both classical and quantum computing attacks, providing a long-term security solution for the Ethereum network. The proposed hard fork would introduce new algorithms that are secure against quantum attacks, ensuring that Ethereum’s security infrastructure remains robust as technology evolves. This proactive approach to security highlights Ethereum’s commitment to long-term sustainability and resilience. By addressing potential vulnerabilities before they become critical issues, Ethereum ensures that its network remains secure and trustworthy for users and developers.

Plasma-Based Scaling Solutions

Vitalik Buterin emphasised the importance of Plasma-Based Scaling in enhancing Ethereum’s transaction throughput. Plasma-based scaling solutions are designed to address Ethereum’s scalability limitations by enabling off-chain transactions. Plasma chains are off-chain networks (secondary blockchains anchored to the main Ethereum network) that process transactions independently before finalising them on the main Ethereum chain, allowing for faster and cheaper transactions while still benefiting from Ethereum’s security without compromising decentralisation or security. This approach significantly reduces the load on the main network, allowing for higher transaction volumes and improved scalability. Periodic checkpoints ensure that the state of Plasma Chains is regularly recorded on the Main Chain, ensuring security and finality. Exit mechanisms allow users to withdraw their assets from Plasma chains to the main chain if they detect any malicious activity. By offloading transactions to Plasma Chains, the overall network can handle a much higher volume of transactions, and transaction fees on these chains are typically much lower than on the main chain. Plasma solutions complement other scaling initiatives like Sharding and Rollups, providing a multi-layered strategy to handle increased demand. By diversifying its scalability solutions, Ethereum ensures that it can accommodate the growing number of users and applications on its network.

Decentralised Staking and Anti-Correlation Incentives

Decentralised Staking aims to make Ethereum’s Proof-of-Stake (PoS) consensus mechanism more secure and inclusive. It involves distributing staking power among a larger number of validators, reducing the risk of centralization and enhancing network resilience. This involves lowering barriers to entry by making it easier for individuals to become validators through reduced hardware requirements and a simplified staking process. The proposal also encourages smaller stake sizes, promoting participation from a wider range of users by allowing smaller stake amounts. It also explores ways to make staking more accessible to individual users specifically, through potential innovations in liquid staking and by lowering the barriers to entry for running a validator node. Additionally, it focuses on improving staking pools by developing evermore decentralized and trustless solutions to allow users to participate without running their own validator nodes, expanding the domain of innovations to include the trifecta : smaller staking amounts, enhanced ease of running a validator node, and expanding the scope of participation . The diversification incentives could take various forms, such as rewarding validators for maintaining unique hardware setups, using different client implementations, or operating from diverse geographical locations. Further, to address the issue of validator centralization, Buterin proposed new anti-correlation incentives within Ethereum’s staking model. These incentives are designed to promote a more decentralised validator set by discouraging correlated behaviours among validators. Anti-Correlation Incentives further bolster security by rewarding validators who stake on less popular assets, promoting the aforementioned diversity in staking choices. By spreading out the risk and encouraging diversity, this proposal aims to enhance the overall security and decentralisation of the Ethereum network and aligns with Ethereum’s broader goals, ensuring that the network remains resilient against potential attacks and vulnerabilities.

Pectra Upgrade

The Prague-Electra, aka Pectra upgrade, scheduled for early-2025, aims to address specific needs of institutional stakers while also improving wallet user experience. It will feature the EVM Object Format (EOF), and introduce EOF-related EIPs. EOF will provide improved code validation and new features through an optional wrapper for the EVM code. The Pectra Upgrade will be Ethereum’s largest and most ambitious upgrade in history, including improvements like EIP-7702 and EIP-7594 (known as PeerDAS) for EOAs and Rollup Scalability. Other EIPs being brought into practice include EIP-7251 (MaxEB), EIP-2537 (BLS precompiles) and EIP-7549(aimed at reducing consensus overhead). This upgrade introduces significant enhancements in staking mechanisms, providing more flexibility and security for institutional users. For institutional stakers, the Pectra upgrade aims to simplify validator duties by streamlining the process of running and maintaining validator nodes. This includes improvements in validator management, enhanced reporting and analytics, and more efficient ways to manage staking rewards. It will enhance block validation by improving the efficiency and speed of block validation processes. The upgrade will also improve data availability by enhancing the mechanisms for storing and accessing on-chain data. Thus it explores various improvements tailored for institutional participants, such as reducing the complexity of validator duties, simplifying block validation, and enhancing data availability. Additionally, the Pectra upgrade includes various improvements in wallet UX, making it easier for users to manage their assets and interact with the Ethereum network. This includes simplified transaction management, making it easier for users to initiate, track, and manage their transactions. The upgrade will improve integration with Layer 2 solutions, providing seamless access to scaling solutions directly from wallets. It will also enhance smart contract interactions by simplifying the process of interacting with decentralized applications (dApps) and smart contracts. The key positive is its potential to streamline Ethereum’s operations, making the network faster and more resource-efficient, thus driving mass-adoption while allowing for innovation and capital injection on an individual-to-institutional spectrum and in a trans-national context.

Layer 2 Solutions

Layer 2 (L2) solutions, such as Optimistic Rollups and zk-Rollups, are designed to scale Ethereum by executing transactions off-chain while maintaining security through the main Ethereum network. These solutions significantly increase transaction throughput and reduce costs, making Ethereum more scalable for various applications. Thus Layer 2 innovations, including Plasma and ZK rollups, are essential for scaling Ethereum. Plasma chains process transactions independently before finalising them on the mainnet, reducing congestion and improving performance, while Rollups bundle multiple transactions into a single batch, which is then processed on the Ethereum mainnet. The EIP-4844 reduced the data availability cost of rollups by up to 90%, while the Dencun upgrade is expected to significantly benefit numerous rollups led by favourites like Optimism and Arbitrum. Both of these solutions are critical for handling the increasing demand on Ethereum as more users and developers join the ecosystem.

Conclusion : What’s Ahead for Eth

The advancements and proposals outlined above reflect Ethereum’s commitment to continuous innovation and improvement. Vitalik Buterin’s vision and leadership have been instrumental in driving these changes, ensuring that Ethereum remains at the forefront of the blockchain industry. The gas model overhaul introduces a more predictable and fair fee structure, benefiting both users and developers. Quantum resistance proposals future-proof the network against emerging technological threats, ensuring long-term security. EIP-7702 enhances user experience and developer capabilities by simplifying account interactions and introducing advanced features. Plasma-based scaling solutions and sharding significantly increase transaction throughput, addressing scalability concerns. While Ethereum excels in ecosystem maturity and developer support, it must continue to innovate to maintain its competitive edge. Platforms like Solana, Polkadot, and Cardano offer unique advantages in performance, scalability, and energy efficiency. However, Ethereum’s comprehensive approach to security, scalability, and user experience positions it well for future growth.Vitalik Buterin’s proposals, from decentralised staking models to advanced account abstraction, underscore Ethereum’s proactive approach to addressing current and future challenges. These initiatives align with the broader goals of enhancing security, improving scalability, and promoting usability. As Ethereum continues to evolve, it remains a critical platform for decentralised applications and smart contracts, driving innovation in the blockchain space.

In conclusion, the future of Ethereum looks promising, with ongoing efforts to enhance its architecture, improve user experience, and ensure security. The synergy between Buterin’s proposals and the broader development efforts within the Ethereum community will be crucial in maintaining its leadership position in the blockchain industry. As Ethereum evolves, it will continue to play a pivotal role in shaping the future of decentralised technologies, driving broader adoption and fostering innovation across the ecosystem.Vitalik Buterin’s visionary proposals and the collaborative efforts of the Ethereum community highlight a commitment to excellence and adaptability. As we look ahead, Ethereum’s role in driving decentralised technologies and fostering a robust, user-friendly, and secure blockchain ecosystem is more critical than ever. The journey of Ethereum is far from over, and its future developments promise to keep it at the cutting edge of the blockchain revolution.