EIP 4844 or Proto-Danksharding is arguably one of the most important updates to Ethereum, the second largest crypto in the world. Highly awaited by the community, its activation is planned for the first quarter of 2024. This update will reduce second layer (L2) transaction fees. But in addition, it will improve the overall performance of Ethereum.
Reduced costs and improved network throughput
EIP 4844 aims to reduce transaction fees on second layer (L2) solutions, up to sevenfold. lower transaction fees will be accompanied by an increase in network bandwidth. According to expert Ryan Berckmans, EIP 4844 should help create a more efficient market for data storage. This is what he calls “blob market clearance” which will notably allow multiply the throughput of Ethereum by six.
The upgrade will not impact the gas costs of the main layer (L1), ensuring stability of execution costs. Consequently, Ethereum profitability and throughput will increase by 600%. With the introduction of EIP 4844, L2 solutions will evolve the Ethereum crypto network in unprecedented ways. Indeed, they will benefit from the upgrade and will contribute to the scaling of Ethereum.
Very good prospects in sight for the crypto ETH
Expected improvements to the Ethereum ecosystem should strengthen its position in the crypto market. According to the data, the network’s revenue growth over the trailing twelve months to Q3 2023 was 10.32%. The quarterly growth rate of 12.57% over the same period highlights a robust uptrend.
The upgrade could further boost revenue growth thanks to increased network efficiency and reduced gas costs. The crypto ETH notably displays a price close to its 52-week high, at 99.32% of the maximum value. This appears to indicate strong investor confidence. The next publication of Ethereum results set for February 1, 2024 will allow us to know more about the financial impact of the upcoming upgrades.
Meanwhile, in the market, Ethereum price is facing major resistance: the yearly high at $2,138. Since Friday, the second crypto by capitalization has actually recorded a drop of 5.5%. Currently, the ETH crypto is back on the psychological zone of $2000.
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