Author: Thor Hartvigsen, Defi analyst Translation: Shan Ouba, Golden Finance

Introduction

While Ethereum outperformed the S&P 500, Nasdaq and gold , but for much of the last year, Ethereum has been in the shadow of its peers, which have seen greater price appreciation and ecosystem growth.

Amazingly, Bitcoin's returns nearly doubled, while Solana's returns briefly reached four digits in late 2023.

Amazingly, Bitcoin nearly doubled by the end of 2023, and Solana briefly touched four-digit returns.

As we enter the new year, the sentiment towards Ethereum on Twitter is not very good either. Public support and morale reached an all-time low, and bulls were considered opposition and heretics. But it seems things are about to change, and there are several catalysts for the Ethereum ecosystem this year.

Using the 2024 roadmap as a guide, let’s see what Ethereum’s future plans are.

1. EIP-4844

In the upcoming Dencun upgrade, EIP-4844 (also known as Proto-Danksharding) introduces novel mechanisms that greatly benefit Layer 2.

Relevant features of this EIP include:

1. blobs (data blocks )

   -A low-cost means to efficiently store large amounts of transaction data;

2. blob-carrying transactions (transactions that carry data blocks)

   - Contains pairs that contain A reference list of data blocks for a transaction.

The use of data blocks allows the creation of a pseudo-layer that improves data availability and thus simplifies communication between L2 and Ethereum.

These new concepts will revolutionize the way rolling aggregation (roll-up) serializers publish transaction data to Ethereum.

The current approach is to add bundled transaction data in the "calldata" of the transaction and send it to L1, which is quite expensive.

However, publishing data to Ethereum using a blob-carrying transaction will significantly reduce gas costs because only a reference to the blob containing the L2 transaction is available to the execution layer Used, this means that the blob data cannot be re-executed. All data contained in a blob is stored in the consensus layer (beacon nodes) for a limited time. A small trade-off for cheaper transactions is increased block size, requiring nodes to have greater storage capacity.

The dramatic reduction in transaction costs on Ethereum Rollup has several benefits. First, it allows for new use cases that are currently too expensive to run on Rollup, such as certain order book trading protocols, web3 games, and more. Second, the reduced cost of publishing transactions to the Ethereum mainnet also leads to increased profit margins for Rollup. Therefore, this is also a direct catalyst for L2 tokens such as ARB, OP, METIS, etc.

2. ETH spot ETF

Although it seems likely that the spot Bitcoin ETF will be approved, But the situation for similar products on Ethereum remains murky. The U.S. Securities and Exchange Commission has delayed a decision on several of these ETFs and is likely to make a decision after the Bitcoin counterpart becomes available to the public.

Despite the disappointing performance of the Ethereum futures ETF and the unsatisfactory capital inflows, institutional interest in spot ETFs is still clearly visible. Many well-known institutions are actively seeking to take advantage of this new investment tool, which is consistent with the ESG concept currently popular in traditional finance.

Currently, all listing applications are pending, and despite delays, positive outcomes are expected. Given the impact of spot BTC ETF applications on BTC prices in the second half of 2023, the Ethereum ETF application alone may drive ETH to outperform the market in the coming months.

3. Re-pledge

Restaking is a novel concept introduced by EigenLayer. It allows you to take advantage of Ethereum’s security and consensus mechanisms. EigenLayer is a marketplace that connects ETH re-stakeholders and the Active Validation Service (AVS). AVS can be any type of service, from oracle networks to sidechains to bridges, all looking to inherit the security of Ethereum. ETH stakers can earn higher staking rewards by re-staking their ETH and delegating it to AVS. Essentially, ETH stakers can participate in data storage, computation, or other additional services in addition to block validation.

In addition to EigenLayer’s upcoming mainnet launch, which is an important narrative for Ethereum and ETH this year, the platform is also conducting a points program for early ETH depositors Upcoming airdrops can be mined through the program. The EIGEN token has the potential to list at a multi-billion dollar valuation, so this airdrop could become a major wealth creation event and potentially a positive catalyst for the Ethereum-native protocol.

Due to the capital efficiency improvements brought about by the Dencun upgrade, currently available L2 solutions will become cheaper, which will make L2 a fast and cheap alternative Be more competitive in a crowded field. Additionally, use cases that were previously unachievable are now worth exploring.

It is expected that L2's user base will grow significantly in the next year, the prospects are very optimistic, and catalysts are emerging one after another.

4. L2 growth

Due to the improvement in capital efficiency brought by the Dencun upgrade, it is currently available L2 solutions will become cheaper, which will make L2 more competitive in a field flooded with fast and cheap alternatives. Additionally, use cases that were previously unachievable are now worth exploring.

It is expected that L2's user base will grow significantly in the next year, the prospects are very optimistic, and catalysts are emerging one after another.

Optimistic Roll-ups

The most popular in the L2 field Attention Optimistic Roll-ups recently announced details of exciting upcoming developments.

Optimism

In order to unify all originally isolated L2, Optimism decided to invest more in infrastructure providers and try to create a network of interconnected chains based on its open source technology stack.

All chains included in a "hyperchain" adhere to the same standard, which ensures maximum interoperability between all chains and allows developers to build structures that can be used by all The protocol used by the child chain.

Arbitrum:

By using one of the Arbitrum chains as Settlement layer, developers can easily deploy private chains with customizable configurations.

Orbit Chain is ideal for building applications with specific network requirements while leveraging Arbitrum's technology and additional features for a variety of use cases:

• Permission access control - The chain's data reading or contract deployment can be restricted by the owner.

• Custom gas token - Transaction fees can be charged in any token.

• Self-Governance  - The Orbit chain is not regulated by the Arbitrum DAO, meaning the owner has full control over the network.

Metis

To solve most of the L2 centralization and security issues of using a single sequencer, Metis is experimenting with the concept of creating a decentralized sequencer pool. Leveraging its existing peer-to-peer validators, this approach would significantly reduce centralization and give stakers of its native token the opportunity to run their own orderers.

Coinbase > Base Funnel

Due to cumbersome bridging The process and having to interact with Ethereum to attract new users has been a challenge for L2, which is unacceptable for users who want to avoid expensive transactions and have a simple user experience.

As one of the largest exchanges in the world, Coinbase attracts a large number of new users from around the world to their platform every year.

This is the perfect scenario for Coinbase to promote its L2 Base to a local audience of major centralized exchanges. Having a huge potential market helps increase visibility and awareness of on-chain applications. Coupled with a simple bridging solution between exchanges and aggregations, even small conversion rates can have a huge net positive impact on the ecosystem.

Eclipse

Another interesting development in the rollup field is Eclipse , which is Ethereum L2 launched later in Q1. Eclipse is unique in that it uses the Solana virtual machine as the execution environment, Celestia for data availability, and Risc Zero for attestation. With the focus on attracting the Solana dapp to Ethereum, this could be another catalyst for the Ethereum ecosystem this year.

5. ETH as a currency

In terms of fee generation, Ethereum alone accounts for More than 50% of the total expenses incurred by L1 in 2023. Its dominance has now waned, largely due to the emergence of the Bitcoin ecosystem following the Inscription craze.

Looking strictly at financial reports, Ethereum is one of the few major blockchains to achieve positive returns.

Because the fee revenue generated by the Ethereum network exceeds the dilution caused by the issuance of new coins, the actual staking return of ETH can be positive, and the nominal staking return will not be offset by inflation. Due to the token burning mechanism introduced by the London upgrade and the move to proof-of-stake in 2022, Ethereum's supply is shrinking at about -0.215% per year, which is a net deflation.

As new upgrades aim to further expand Ethereum and existing concepts continue to develop steadily, the theory of "ultrasonic currency" may not be groundless.

Summary

All in all, after experiencing a calm period in 2023, Ethereum will be in 2024 It’s going to be an eventful year ahead. The technicals and narrative are undoubtedly bullish, but it remains to be seen whether prices will rise in tandem. Historically, network upgrades usually lead to positive gains.