Mr Viral
Ethereum Improvement Proposal (EIP) 7781 aims to improve Ethereum’s network throughput by 50%.
Reducing slot times could address critical scalability issues and lower operational and gas fees.
It has the potential to boost innovation and adoption in the Ethereum ecosystem.
A new proposal designed to improve Ethereum’s transaction speeds could greatly boost the network’s processing power, making it faster and cheaper.
The blockchain has robust security and high decentralization, but the compromise has been significantly slower transaction speeds, especially compared to newer networks like Solana.
The EIP-7781 (championed by Illyriad Games’ co-founder, Ben Adams) intends to enhance Ethereum’s network throughput by 50%.
Scaling Hurdles Shadow Ethereum’s TVL Triumph
Ethereum dominates the decentralized finance (DeFi) arena, with its Total Value Locked (TVL) taking up more than half (55.18%) of the market.
The blockchain network hosts a variety of innovative financial services, including the decentralized exchanges (DEXs) Uniswap and Sushiswap, major lending platforms (Aave and Compound), and stablecoins ($USDT and $USDC).
However, the high demand for network transactions results in scalability bottlenecks, thus high operational and gas fees (transaction costs).
Gas fees rise during periods of low validator availability and network congestion; users compete (pay more) to have their transactions processed faster.
As of September 2024, Ethereum’s network could only handle 15–30 transactions per second, while Solana supported up to 65K.
Buterin Slashed Transaction Fees Amid Market Excitement
In January, Vitalik Buterin (Ethereum’s co-founder) proposed increasing the blockchain’s ‘gas limit’ (the number of transactions that can take place in each block) by 33% to boost the network’s overall throughput.
There have since been subsequent changes to take the improvement to 50%.
Despite Buterin’s proposal, gas fees remained high because of the significant network traffic. For example, on March 4, transaction costs exceeded 174 $GWEI, and some NFT transactions cost roughly $400.
The traffic and fees partly spiked over $ETH, hitting 3.5K – its greatest level since the beginning of 2022 – and a CryptoPunk selling for $16M.
Shortly after, Ethereum developers launched a ‘pump the gas’ effort in the hope of slashing transaction fees between 15% and 33%.
The same month, Ethereum added ‘data blobs’ so the network could hold arbitrary bits of Layer-2 (L2) data in a separate, dedicated area (cheaper than the network’s regular block space).
Ethereum’s ‘blob count’ is currently limited to three and nearing capacity. To prevent congestion and improve scalability, Buterin recently proposed increasing it to four (and a maximum of eight).
EIP-7781 Could Make Ethereum Faster & Cheaper
Adams aims for EIP-7781 to solve Ethereum’s scalability issues by reducing slot times (the intervals between block proposals) from 12 to 8 seconds.
As a result, he believes the proposal could increase transaction throughput.
According to Ethereum 2.0’s researcher, Justin Drake, it might save roughly $100M in CEX-DEX arbitrage per year and lead to better user execution.
Other upsides of adopting the EIP 7781 include:
Boosted DEX utility
Faster processing times for all Ethereum blockchain users
Cheaper gas fees for users
L2 networks (like Optimism and Arbitrum) might become quicker and less costly
The blockchain’s capacity will be ramped up to handle blobs
However, like all good things, there’s a catch: to match the pace of the new processing demands, Ethereum’s Proof-of-Stake (PoS) validators might need additional resources, like powerful hardware, which can be expensive.
EIP-7781 – Heavier Wallets & Widespread Innovations
EIP-7781 has the potential to propel Ethereum to greater heights.
By reducing Ethereum’s slot times and expanding its capacity, the proposal could address congestion and scalability issues, lowering operational costs and gas fees.
Cheaper development and transaction fees could lead to happier investors and innovators with heavier wallets, as well as broader adoption and innovation.
References
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