Scaling Ethereum

Ethereum is scaled using layer 2s (also known as rollups), which batch transactions together and send the output to Ethereum. Even though rollups are up to eight times less expensive than Ethereum Mainnet, it's possible to optimize rollups further to reduce costs for end users. Rollups also rely on some centralized components that developers can remove as the rollups mature.

Making data cheaper

Rollups collect large numbers of transactions, execute them and submit the results to Ethereum. This generates a lot of data that needs to be openly available so that anyone can execute the transactions for themselves and verify that the rollup operator was honest. If someone finds a discrepancy, they can raise a challenge.

Proto-Danksharding

Rollup data has historically been stored on Ethereum permanently, which is expensive. Over 90% of the transaction cost users pay on rollups is due to this data storage. To reduce transaction costs, we can move the data into a new temporary 'blob' storage. Blobs are cheaper because they are not permanent; they get deleted from Ethereum once they are no longer needed. Storing rollup data long-term becomes the responsibility of the people that need it, such as rollup operators, exchanges, indexing services etc. Adding blob transactions to Ethereum is part of an upgrade known as "Proto-Danksharding".

With Proto-Danksharding, it is possible to add many blobs to Ethereum blocks. This enables another substantial (>100x) scale-up to Ethereum’s throughput and scale-down to transaction costs.

Danksharding

The second stage of expanding blob data is complicated because it requires new methods for checking rollup data is available on the network and relies on separating their building and block proposal responsibilities. It also requires a way to cryptographically prove that validators have verified small subsets of the blob data.

This second step is known as "Danksharding". Implementation work continues, with progress being made on prerequisites like separating block building and block proposal and new network designs that enable the network to efficiently confirm that data is available by randomly sampling a few kilobytes at a time, known as data availability sampling (DAS).

Decentralizing rollups

Rollups are already scaling Ethereum. A rich ecosystem of rollup projects(opens in a new tab) is enabling users to transact quickly and cheaply, with a range of security guarantees. However, rollups have been bootstrapped using centralized sequencers (computers that do all the transaction processing and aggregation before submitting them to Ethereum). This is vulnerable to censorship, because the sequencer operators can be sanctioned, bribed or otherwise compromised. At the same time, rollups vary(opens in a new tab) in the way they validate incoming data. The best way is for "provers" to submit or validity proofs, but not all rollups are there yet. Even those rollups that do use validity/fraud proofs use a small pool of known provers. Therefore, the next critical step in scaling Ethereum is to distribute responsibility for running sequencers and provers across more people.

Current progress

Proto-Danksharding was successfully implemented as part of the Cancun-Deneb ("Dencun") network upgrade in March 2024. Since its implementation, rollups have begun utilizing blob storage, resulting in reduced transaction costs for users and millions of transactions processed in blobs.

Work on full Danksharding continues, with progress being made on its prerequisites like PBS (Proposer-Builder Separation) and DAS (Data Availability Sampling). Decentralizing rollup infrastructure is a gradual process - there are many different rollups that are building slightly different systems and will fully decentralize at different rates.

More on the Dencun network upgrade and its impact