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Ethereum: Imminent Explosion of Network Profitability with EIP 4844

Tue 28 Nov 2023 ▪ 3 min of reading ▪ by Fitah
Getting informed Blockchain

The EIP 4844 or Proto-Danksharding is arguably one of the most significant updates for Ethereum, the world’s second-largest cryptocurrency. Highly anticipated by the community, its activation is planned for the first quarter of 2024. This update will enable a reduction in layer 2 (L2) transaction fees. Moreover, it will enhance the overall performance of Ethereum.

Ethereum

Reduction of Fees and Network Throughput Improvement

The EIP 4844 aims to reduce transaction fees on layer 2 (L2) solutions, potentially decreasing them by a factor of seven. The reduction of transaction fees will be accompanied by an increase in bandwidth on the network. According to expert Ryan Berckmans, the EIP 4844 should allow for the creation of a more efficient market for data storage. This is what he calls “blob market clearance,” which will notably increase Ethereum’s throughput by sixfold.

Ryan Berckmans, an ETH community member on Twitter

The upgrade won’t impact the gas costs of the main layer (L1), ensuring the stability of execution costs. Consequently, Ethereum’s profitability and throughput will increase by 600%. With the introduction of the EIP 4844, L2 solutions will evolve the Ethereum crypto network in an unprecedented way, as they will benefit from the upgrade and contribute to Ethereum’s scaling.

Excellent Prospects in Sight for ETH Crypto

The expected improvements to the Ethereum ecosystem should strengthen its position in the crypto market. According to data, the network’s revenue growth over the last twelve months in the third quarter of 2023 was 10.32%. The quarterly growth rate of 12.57% during the same period highlights a robust upward trend.

The upgrade could further boost revenue growth due to increased network efficiency and reduced gas costs. Notably, the ETH crypto is priced close to its 52-week high, at 99.32% of its maximum value. This seems to indicate strong investor confidence. The next release of Ethereum’s financial results, set for February 1, 2024, will provide more insight into the financial impact of upcoming upgrades.

In the meantime, on the market, the price of Ethereum is facing a major resistance: the annual peak at $2,138. Since Friday, the second-largest cryptocurrency by market capitalization has indeed recorded a decline of 5.5%. Currently, the ETH crypto is back to the psychological area of $2,000.

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Fitah avatar
Fitah

Je suis passionnée par les cryptomonnaies, un monde que j'ai découvert il y a peine 3 ans. Mon seul but est de vous informer de cet univers incroyable à travers mes articles.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.