Major Ethereum Upgrade Goes Live on Second Testnet

Speaking of Ethereum, the blockchains biggest upgrade since early 2023 went live on the second of three test networks, bringing the much anticipated D KN project and its proto Denk sharding feature a step closer to reality. I spoke with coin desk's Ethereum protocol reporter Margot Ny about the developments yesterday ahead of the upgrade, it kicked off the conversation about why Ethereum upgrades are such a big deal. Let's take a look. Ethereum goes through a lot of these upgrades just because there's always been this road map and there's vision to make the Blockchain more scalable, more user friendly and as the network gets bigger and bigger, it matures there is this need for to make these improvements so that as, you know, as activity grows and as the user base grows, it could be more easily used. And so that's why we're seeing at this point. Um you know, upgrades happening on Ethereum basically almost once a year. The biggest one, you know, I think was the merge, we can all recollect that was sort of happening um or was in the making for a while. Um Since then, we've had, you know, Chappelle, we talked about this last year on here where, where the uh ether withdrawals or state ether withdrawals um were enabled. And so now this next one, it's called Denk. It's supposed to mostly help roll ups. The layer two blockchains that sit on top of Ethereum over the last few years has been a growing ecosystem with the with the layer twos. So it's important to address those issues too. And I unpack this for us a little bit more. What functionality does this unlock for users? Sure. So um high level uh basically if you're transacting on a roll up or layer two, the transaction fees are supposed to lower with this. Mostly thanks to a in the code, the more official title is called E IP 4844. But everyone knows it sort of as proto dame Shorting, which is this weird terminology that the devs have come up with. But basically what it's supposed to do is supposed to make extra available room for blobs of data of what they call it. But that sort of enables for transactions to happen on um roll ups or those fees to to to become cheaper. And also, you know, like I would mention that as more and more people use the Ethereum Blockchain, the availability like the data available to store and track what like and download those transactions. Like the info of those transactions has become more and more expensive. And so this upgrade is supposed to also help make that cheaper when you want to sort of download that data. Um, yeah, so that's sort of what, what the main, there are some other minor protocol changes happening in these packages. Like, usually they'll ship something that's a big, um, technical change with a bunch of other little ones, but that gets very into the weeds. That's sort of like what we like to call the star of the show. I was going to ask you to explain proto dank shouting to me like I'm five and so I'm going to do it anyway. Just humor me. I'm five years old. Just break it real down for me. Sure. So the doves actually have this really great analogy that I think of proto dank shorting. It is the first iteration of one of these technical features that the developers want to tackle cold charting, which is basically splitting up the Blockchain into mini blocks to or blockchains to sort of be able to process more data or process more transactions. Now, what does that mean? Like, how can we sort of think of this in a more basic level, let's say, like you're driving a car on a highway, right? And you add more lanes to the highway to be able to process more cars. And in theory, that's supposed to get more cars through, get you through faster because it's able to handle a bigger load of cars. That's sort of the same thing that's happening here on the Blockchain. We're adding more mini shards or we, that's the eventual goal is to add more shards to make split offs of many blockchains to be able to transact or handle more transactions and therefore make those transactions hopefully cheaper. Because right now if there's more congestion on the Blockchain, like as if there's more congestion on the highway tolls might be higher. So, you know, gas fees might be higher. It all sort of is like a great comparison. Um, but that's sort of, if you're going to picture it, that's sort of the way to go about or to think about this. Ok. And the test net is like a dress rehearsal for the devs. What happens if something goes wrong? Well, that's why they have these test nets to make sure that things can go wrong because they can address those bugs in their, in their tests and therefore patch it out before it gets onto the main net block chain where there's a lot more at stake. Right. There's like a ton of apps, a ton of crypto locked into the smart contracts and we've had already one test. The first one was on girly that happened about 10 days ago and there was some slight issue in it. There was a bug that basically the, the terminology they use meant that they weren't able to finalize transactions, which sounds a lot scarier than it is. But basically, you know, when you, when you transact on the Blockchain, it happens and then it sort of gets written in ink and it becomes immutable on the, in this case, it wasn't able to come immutable until like a few hours later. So they were figuring out what happened with that bug. So they go through these dress rehearsals like three times in order to ensure that, you know, once this hits Main Net, it's not going to create such big issues. Um But yeah, that now is the time to make mistakes basically, like that's why they have these dress rehearsals. And if there's a mistake that could push out the main net launch, yes, if there's a mistake, there could put up, put that the main net launch, even there's like there's a test next week that could push back that. But right now, they haven't really scheduled the date yet for the main net. It's projected to happen sometime of end of February, maybe early March. And that really just depends on how these tests run and how comfortable the developers feel shipping it. If you look at Ethereum history, they like to lean on the safe side, they postponed the merge for years and years because they want to make sure it ran smoothly. So my guess is this is just a judgment call is that, you know, they want to try and push it um for as like as safe a time as possible. Ok. And Margot, it's 2024. I can't believe it's already almost February. But what are the other big expectations from Ethereum as we head into 2024? Yeah. So this is going to be definitely the biggest change happening right now in 2024 they are already planning their next big upgrade. But otherwise I think a lot of the conversation is still happening around the layer twos on Ethereum, um especially, you know, this upgrade is catered towards those layer two roll ups. Um So we're gonna have to sort of see what the aftermath of all of this is. Um Once this goes live, Margo, thanks so much for joining the show and thanks for explaining that to us using just normal words. I think it's, it's starting to make a lot of sense.