In this new monthly series, we provide an overview of ecosystem, tech and research news from the EVM ecosystem. These articles are provided by Ed Prinz, co-founder and President of DLT Austria, and are aimed at the experienced reader. If you require specific background to get you started on EVM technicalities, please check out this source here. As SMAPE Capital is infrastructure agnostic and committed to a multi-chain interoperable Web3, we will include news from other relevant ecosystems over time.
Environment News
Revolutionising Blockchain: Vitalik’s Roadmap for Single Slot Finality and Beyond
Vitalik’s revised roadmap includes implementing single slot finality (SSF)* to address weaknesses in the PoS design, substantial advancements in rollups and Verkle trees, a reimagined scourge concept, deprioritising state expiry, and temporarily shelving VDFs (Verifiable Delay Functions). SSF means an achievement of final confirmation for a transaction or block within a single time slot, ensuring its irreversibility.
*”single slot finality (SSF)” refers to a state where the final confirmation of a transaction or block is achieved within a single time slot. This means that the transaction or block is considered as final and irreversible without the need for additional confirmations. This concept is significant as it impacts the security and efficiency of blockchain networks, particularly concerning consensus mechanisms and transaction processing speed. It reflects the ability of a blockchain system to quickly and conclusively validate transactions or blocks.
Source:
https://eprint.iacr.org/2023/280
https://ethresear.ch/t/sticking-to-8192-signatures-per-slot-post-ssf-how-and-why/17989/3
Vitalik’s Vision: Advancing Layer 2 with Trustless CCIP Resolvers for Enhanced ENS Integration
Vitalik Buterin suggests that all Layer 2 solutions should focus on developing (trustless, merkle-proof-based) CCIP resolvers. This would enable direct registration, updating, and reading of ENS subdomains on Layer 2s, emphasising the need for ENS to be both significant and cost-effective.
Source:
https://docs.ens.domains/dapp-developer-guide/ens-l2-offchain
Development News
Consensus layer:
Nimbus v24.1.0: The Goerli testnet has implemented the Dencun upgrade and added a new v3 blocks/{slot} end-point to the Beacon API.
Execution layer:
Erigon v2.56.0: Upgrade of Dencun on the Goerli testnet.
Nethermind v1.25.0-rc: The Goerli testnet has been upgraded with Dencun and now supports OP Stack Canyon.
EIPs
Informational EIP7587: This EIP reserves precompile ranges to ensure there are no conflicts with those used by the Rollup Improvement Proposal (RIP) process.
ERCs:
ERC7586: This proposal introduces a standardised framework for on-chain interest rate swaps. The proposed standard aims to facilitate the seamless exchange of fixed and floating interest rate cash flows between parties, providing a foundation for decentralised finance (DeFi) applications.
ERC7588: This EIP proposes a standard for attaching metadata to blobs carried by shard blob transactions, as introduced by [EIP-4844](./eip-4844.md). The metadata is a JSON object that conforms to a predefined schema and is encoded in hexadecimal with UTF-8 character encoding. The metadata is put in the ‘data’ field of the blob transaction.
Ethereum’s Dencun Upgrade: Pioneering Efficiency and Governance with EIP Integration and Working Groups
The Ethereum “Dencun” upgrade, also known as “CancunDeneb,” is set to undergo testing on various testnets, aiming to enhance Ethereum’s efficiency by lowering fees and adding new features. This upgrade includes several Ethereum Improvement Proposals (EIPs), like EIP 4844 for reduced fees on layer2 networks, and changes in the governance of EIP, ERC, and RIP. Significant changes in the Ethereum Improvement Proposal process include the integration of all changes into the EIP framework and the division of the EIP process into Working Groups, focusing on protocol and application layer standards.
Source:
https://eips.ethereum.org/EIPS/eip7569
https://github.com/ethereum/executionspecs/pull/860/commits/8a92d6d21f38d498922a1bb78d32e40a8f207653
https://github.com/ethereum/consensusspecs/pull/3531
Balancing the Scales: The Critical Role of Client Diversity in Ethereum’s Resilient Network
Ethereum’s client diversity is crucial for network resilience, but currently, a single client dominates both the execution layer (Geth with 84%) and the consensus layer (Prysm with 41%). This imbalance poses risks like chain splits or attacks. Ethereum’s shift from proof-of-work to proof-of-stake further highlights these risks, making it essential to distribute users evenly across clients. For those unable to run a validator node, decentralised liquid staking services like Lido or Rocketpool offer a safer, more transparent alternative to centralised exchanges, contributing to client diversity.
Source:
https://executiondiversity.info/
Ethereum’s Evolution: ERC4337 and EIP3074’s Diverse Paths to Enhanced Account Functionality
Ethereum’s ERC4337 and EIP3074 are both aimed at enhancing account functionalities but in different ways. ERC4337 offers full account abstraction, allowing for diverse features like various signature schemes, key rotation, access policies, and gas sponsorship. In contrast, EIP3074 focuses on execution abstraction, enhancing externally owned accounts (EOAs) with custom execution logic for execution improvements. Both proposals contribute to Ethereum’s functionality, with ERC4337 supporting multiple EVM chains and EIP3074 emphasising simplicity and gas efficiency.
Source:
https://eips.ethereum.org/EIPS/eip-3074
Lodestar’s Challenge: Addressing Critical Errors in Ethereum Consensus with Version 1.12.1 Patch
Lodestar, an Ethereum consensus client, faced a critical issue in version 1.12 where validators missed block proposals, leading to “BLOCK_ERROR_INVALID_STATE_ROOT” errors. Investigations revealed that these errors were caused by mismatches in attestation roots and aggregation bits during block production. The team addressed this by cloning attestations as separate objects, and users were advised to skip version 1.12.0 and upgrade directly to the patched version 1.12.1.
Source:
https://github.com/ChainSafe/lodestar/releases
Teku 23.12.0: Enhancing Ethereum with New Features and Performance Upgrades, Navigating Lighthouse Compatibility
Teku’s version 23.12.0 introduces the “ — checkpoint-sync-url” option and various performance improvements, including new Beacon APIs and honest validator late block reorganisation features. It also supports basic authentication for external signers and updates third-party libraries, but warns of incompatibility with Lighthouse beacon nodes, advising the use of version 23.11.0 in those cases. Known issues in this release are expected to be resolved in the upcoming version 23.12.1.
Source:
https://github.com/ConsenSys/teku/releases
Nethermind 1.24.0: Streamlining Synchronization and Expanding Network Support with a No-Downgrade Update
Nethermind’s version 1.24.0 features improvements to the headers database, reducing synchronisation requirements in terms of IOPS and bandwidth. It includes updates for OP Sepolia and Base Sepolia support, and archive configuration for Optimism and Base networks. However, users should be aware that once upgraded to this version, downgrading to previous versions is not possible.
Source:
https://github.com/ChainSafe/lodestar/releases/tag/v1.12.1
https://github.com/NethermindEth/nethermind/releases/tag/1.24.0
https://github.com/Consensys/teku/releases/tag/23.12.0
Research News
Impact Assessment: Intentional vs. Unintentional Delays on Ethereum’s Network Stability and MEV Rewards
The study explores the impact of intentional and unintentional delays by validators on Ethereum’s network. It finds that intentional delays to increase MEV rewards have a small but increasing impact on consensus rewards, while unintentional delays, often caused by network issues, can significantly affect the network more. The conclusion suggests that managed intentional delays have less impact on network stability compared to unintentional ones, highlighting the need for strategies to mitigate these effects, especially for validators with varying system performances.
Source:
https://ethresear.ch/t/empirical-analysis-of-the-impact-of-block-delays-on-the-consensus-layer/17888
Balancing Act: Evaluating Artificial Latency’s Impact on Ethereum’s MEV-Boost and Systemic Health
The research investigates the effects of artificial latency in the Proposer Builder Separation (PBS) system of Ethereum, particularly in the MEV-Boost auction. It reveals that while latency optimisation might increase MEV revenue for node operators, it poses systemic challenges, such as increased centralisation risk and network inefficiencies. The study, including findings from the Adagio pilot, shows that these strategies can lead to higher gas costs, more ETH being burned, and a disadvantage for smaller node operators, emphasising the importance of a balanced approach in implementing latency optimization.
Source:
https://ethresear.ch/t/the-cost-of-artificial-latency-in-the-pbs-context/17847
Arbitrage Unveiled: An Empirical Analysis of CEX vs. DEX on Ethereum
The study conducts an empirical analysis of arbitrage between centralised (CEX) and decentralised exchanges (DEX) on Ethereum. It examines the relationship between builders and searchers, estimates the profits from maximal extractable value (MEV), and analyses common arbitrage strategies. The findings reveal the concentration of market players in arbitrage, the dominance of certain symbols in trades, and the nature of transactions, highlighting the effectiveness and limitations of current strategies and suggesting the need for further research on value flow in the Ethereum ecosystem.
Source:
https://ethresear.ch/t/empirical-analysis-of-cross-domain-cex-dex-arbitrage-on-ethereum/17620
EIP7251: Elevating Validator Power in Ethereum’s Consensus Mechanism
Selecting proposers using EIP7251 (increasing the maximum effective balance) maintains the same probability for consolidated validators. The study discusses Ethereum Improvement Proposal (EIP) 7251, which proposes increasing the maximum effective balance (MaxEB) for validators from 32 ETH to 2,048 ETH. It examines the impact of this change on proposer selection in Ethereum’s consensus mechanism. The process of selecting a block proposer is described as a two-stage process involving a shuffle of validator indices and an eligibility check. The study presents detailed probability calculations and scenarios to understand how this change might affect the likelihood of different validators being chosen to propose blocks. It concludes with a discussion on the strategic implications for stakers considering validator consolidation.
Source:
https://ethresear.ch/t/proposer-selection-with-increased-maxeb-eip-7251/18144
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