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digital daily: Danksharding

Danksharding: Network congestion is Ethereum’s high-class problem. Demand is so strong at times that the lineup is costly to clear. But it’s also a necessary evil because it motivates investment in scaling solutions. Ethereum’s challenge is the simultaneous handling of three crucial functions – making data available, performing transaction execution, and forming consensus. When network traffic increases, competition for the limited space in each block intensifies, causing fees to rise. Layer-2s are an engine of compression, bundling multiple transactions into one before uploading them to the Ethereum Mainnet for final record keeping. Transaction costs average 23 cents for Layer 2 protocols versus the $5 in Ethereum’s Mainnet this year. But what happens when Layer-2s get congested? Even more investment in scaling solutions, naturally. Solutions like “proto-danksharding” (EIP-4844). Danksharding isn’t only fun to say – it’s functional, easing transaction processing by creating a new space in the Ethereum execution layer called "blobs” that aren’t stored forever, so they are much cheaper. Transaction records pushed to these blobs are assigned to a group of validators and executed independently. It should bring costs for Layer 2s down by 10-100x. While this proto-upgrade is set for later this year, the endgame of full danksharding is even more exciting. More than 100,000 transactions will be processed at near-zero costs on the Ethereum network – the big theme of the ETH Community Conference in Paris next week.