In-Depth Analysis of the Ethereum Prague Upgrade: A Change in Landscape or Routine Maintenance?

If the history of blockchain is the history of Bitcoin's scaling, then Ethereum's periodic upgrades are the core indicators in the direction of scaling.

The major version hard fork upgrade of Ethereum, occurring once every 1-2 years, will gradually radiate from itself to various Ethereum series L2s, and then expand to the development of multiple L1s. Each hard fork contains EIPs that represent the essence of the Ethereum core community, balancing benefits and costs.

Let's take a technical look at the 11 EIPs of the Prague-Elektra upgrade one by one, to understand what they are, their uses, and why they were selected.

Background

The upgrade is expected to be released on the Sepolia testnet on March 5 and on the Ethereum mainnet on April 8.

The first sentence of the version released 4 days ago from the Ethereum official code repository is: "Oh, another hotfix version!" Yes, there has been a problem. The version code activated on the Holesky testnet has caused a fork in the testnet (, which can be understood as a large-scale outage ).

Although we do not need to focus on the specific code bugs of the fork, we can see the complexity of this content.

From a personal perspective, this upgrade is also the most influential one since the merge from PoW to PoS, which will completely change the operating model on the chain and bring a brand new experience.

This upgrade has attracted the attention of wallet teams including Okx, Metamask, WalletConnect, Biconomy, BaseWallet, Uniswap, Rhinestone, ZeroDev, TrustWallet, Safe, etc. They are mostly ensuring that they can adapt in a timely manner during the mainnet switch, and as users, we can also experience it through wallets.

But the real core issue is - this upgrade, aside from the technical implementation by the developers, can it truly leverage the ecological landscape of Ethereum?

Is its change deep enough, or is it just a routine patch by the Ethereum Foundation in the L2 era?

Panoramic Scan

Overall, this upgrade presents three main characteristics:

1. After Ethereum's development has entered the deep water zone, the new proposal initiators that can be included are basically all pure insiders of the Ethereum Foundation. Vitalik is even the main proponent of important changes. It is almost impossible to see the creative input of other roles in official upgrades, which may also support the voices in the market that "Ethereum is becoming increasingly 'stubborn'", as the decision-making system is becoming more and more centralized.

2. The market rhythm of Ethereum is accelerating. This upgrade has 8 proposals since the basic consensus was completed last November, and the actual execution now includes 11 proposals along with 3 L2 optimization initiatives driven by Vitalik. Previously, major versions were primarily focused on a single core with a few optimizations, but now it is almost a multi-faceted approach. The long-discussed account abstraction hard fork version has also been included. From this, we can feel the current radical state under the explosion of multi-chains, with the EVM ecosystem facing the SVM ecosystem such as Solana, the Move ecosystem such as Aptos, and various BTC L2s thriving under the development of BTC.

3. Ethereum is increasingly inclined to optimize user experience by leveraging the advantages of ecological collaboration. You might think that optimizing user experience is a given, right? But in reality, many major version merges of Ethereum have not been closely related to the ordinary user experience. The previous adjustment to the block size ( aimed to reduce user costs and price fluctuations, which can be considered an optimization of user experience from ) back in 2018. The last time, by introducing blobs, the L2 user transaction fee costs were significantly reduced, and this time, we can see that Ethereum is beginning to focus on optimizing user costs at three different points in time.

But the question is, does Ethereum really prioritize "user experience"? Or is it merely being forced to optimize user experience?

Experience Optimization

The most important change is EIP-7702, which introduces the account abstraction mechanism from the chain layer. We have previously provided a systematic article interpretation on this, so we will not elaborate further this time.

Objectively speaking, EIP-7702 breaks several impossible rules on multiple chains and also disrupts the application logic of most DApps.

For users, they are still EOA addresses and only drive and use CA logic when needed, so the holding cost is reduced. There is no need to first convert the on-chain CA identity before operating, which means users do not need to register. Users can easily achieve multiple parallel transactions with EOA, such as combining authorization and execution of deductions, which inherently lowers the transaction costs for users.

For DApps, especially for project parties that require on-chain enterprise-level management, such as exchanges, this is a revolutionary optimization. Once batch aggregation is natively implemented, the basic costs of exchanges can be instantly reduced by more than half, ultimately benefiting users.

So, although it has changed a lot, from the perspective of reducing costs, it is worth all DApps to study and adapt, because this time, users are undoubtedly on the side of EIP-7702.

But there is also an invisible risk here: while account abstraction reduces interaction costs, it also increases the complexity of user permission management. If wallet manufacturers fail to adapt correctly, it may lead to unexpected security vulnerabilities. In the past, a single operation could at most result in the loss of assets on a single chain, but now it could lead to losses across the entire chain, or even timed explosions. Clearly, this is an upgrade that phishing hackers love, and users need to be more cautious about on-chain transactions.

Application Side Optimization

EIP-2537 introduces precompiled operations for the BLS12-381 elliptic curve, optimizing complex cryptographic operations such as BLS signature verification, providing higher security and computational efficiency. This will make it easier for ordinary users to use multi-signature smart contract wallets at a lower cost. It significantly reduces the complexity of signature verification calculations and Gas costs, and can also more efficiently implement and support features such as zero-knowledge proofs and homomorphic encryption. It will play a role in privacy and interoperability.

EIP-2935 stores the last 8192 block hashes in the storage of a certain system contract, in order to provide recent block hash data for stateless clients. This design allows clients to access historical block hashes during execution without needing to store the entire chain's historical data themselves. Although it has no direct impact on ordinary users, it will promote the emergence of some stateless clients, which have optimization value for applications that require verification services on-chain. It also helps with the costs of Rollup L2, as most L2s need to access L1 block hashes from the past period to verify the consistency of on-chain data and historical information.

Multiple Optimizations of Staking Scenarios

Ethereum staking is a big topic, but it has little impact on ordinary users (. If you participate in staking, you need to think deeply about the economic logic here ).

EIP-6110 will implement staking operations processing through an on-chain protocol mechanism, eliminating the voting mechanism at the consensus layer, and optimizing the security and efficiency of staking traffic.

EIP-7002 provides a mechanism for the execution layer of Ethereum to trigger validator exits and partial withdrawals, allowing validators using the "0x01" withdrawal credential to independently control their staked ETH from the execution layer.

EIP-7251 raises the effective staking limit for a single validator to 2048 Ether(, while the minimum staking limit remains at 32 Ether.

EIP-7549 moves the committee index field of the "Attestation" message in the consensus layer outside the message to simplify verification and improve efficiency.

The macro background is that the Ethereum validator cluster is growing rapidly, with over 830,000 validators as of October 2023. Since the MAX_EFFECTIVE_BALANCE is limited to 32 ETH, node operators need to create multiple validator accounts to manage larger staking assets, which has led to the existence of a large number of "redundant validators."

By enhancing the maximum limit through EIP-7251, for aggregated staking protocols like Lido, it can reduce the number of controlling accounts and lower system complexity, but this may exacerbate decentralization issues, making the ETH staking market more centralized. Maintaining a minimum stake of 32 ETH indicates that it still requires the participation of large holders, representing a compromise with the ecosystem of aggregated protocols, and also avoids frequent operations by small holders that could impact the stability of the consensus layer.

EIP-7549 increases the flexibility of withdrawal operations, making it easier for stakers and node operators to enhance their control over funds.

Ethereum continuously optimizes the staking experience, essentially to strengthen the community of stakers and node operators, which is the lifeblood of Ethereum after the merge. Once a large amount of funds no longer revolves around Ethereum, its security itself will be undermined.

With the support of multiple EIPs, larger-scale node operators can merge multiple validator accounts, while also providing more flexibility for small validators, such as increasing returns through compound earnings or more flexible staking increments.

This point is very important. Originally, after reaching 32 ETH, if an additional 10 ETH was generated as profit, it would not be staked again because it would require a total of 32 ETH to open a new account. However, after this update, it is now possible to directly stake 42 ETH. Clearly, the compound interest earnings can return to ETH again.

Under the current situation of weak returns in DeFi projects on the ETH market, this may continue to siphon off funds, leading to a decrease in the liquidity of ETH. This could be the motivation behind the foundation implementing this series of measures.

Optimization of the L2 Ecosystem

EIP-7623 increases the gas fee for calldata in transactions directly from 4/16 gas per byte to 10/40 gas. The two values here differentiate the fees for 0 bytes and non-zero bytes, representing a 2.5 times increase. The essence is to reduce block pressure and compel L2 to use blobs more instead of calldata.

EIP-7691 increases the capacity of blobs in blocks, thereby supporting larger-scale L2 storage space. In the previous Cancun upgrade, there were two core parameters representing blobs: target and max, which indicate the target number of blobs per block and the maximum number of blobs per block, respectively. Cancun was 3 and 6, and now after Prague, the parameters have changed to 6 and 9, in short, it has been expanded.

EIP-7840 adds a configuration file that allows clients to dynamically adjust the blob quantity settings of EIP-7691. There is also a parameter called baseFeeUpdateFraction that can adjust the responsiveness of gas pricing for blobs.

The core selling point of Ethereum has shifted from the contract system of the DeFi summer to the L2 ecological community. Any other chain system, even this year's hottest BTC L2 system ), still fundamentally relies on the expectations of L2 (, and is completely not in the same competitive position as Ethereum's L2.

Because either it is like BTC, where the chain limitations make it very difficult to achieve practical meanings of data rollback and security sharing as L2. Other SVM and Move systems are essentially still developing their own L1 and are only shallowly exploring L2 on top of that. Of course, the high performance of these chains is relatively less dependent on making L2.

So Ethereum achieves its enhancement through the TPS of L2. Of course, there are many issues, such as liquidity fragmentation and cross-chain complexity. But this is the only path it can take now. After all, once Web3 develops to the stage of high-frequency application chains, it won't frequently cross chains, and there are attempts to solve liquidity and universality issues with tracks like chain abstraction.

The transaction costs on L2 will be heavily derived from the blob capacity of Ethereum, so modifying the gas fees for calldata is intended to incentivize L2 to use more blobs instead of using the calldata permanently stored on Ethereum to store L2's state data. Additionally, the capacity of the blobs needs to consider future increases in L2 and should be dynamically configurable.

Through this development direction, it can further determine the certainty of the L2 direction, which also means the certainty of the market demand for solving the shortcomings of L2.

Conclusion

The Prague upgrade, as a key stop on Ethereum's ongoing evolution, resembles a compromise that involves continuous adjustments and negotiations. It seems that Ethereum is being pushed by the market rather than actively leading, because apart from staking and Ethereum's unique optimizations on L2, other features like BLS and account abstraction have already been widely piloted by other L1s.

However, in terms of overall significance, this upgrade, although it has not sparked widespread market discussions like "London" or "The Merge", is quietly laying a higher foundation for the scalability and decentralization of the Ethereum network. The advancement of account abstraction will reduce the threshold for users to engage with crypto applications, and the improvement of the staking mechanism will further...