​Resilience to censorship and centralization. Vitalik Buterin presented a new Ethereum roadmap

In September, the Ethereum (ETH) network changed its consensus algorithm to Proof-of-Stake (PoS), shifting management of the blockchain from miners to validators. The upgrade, called The Merge, was designed to improve the security and scalability of the network, as well as make it more environmentally friendly, but Ethereum co-founder Vitalik Buterin repeatedly noted that many more goals and improvements are planned. He published an updated roadmap of the project, in which he described the future of development and upcoming innovations step by step.

Buterin added one new item to the existing plan and several updates. Now the roadmap for the development of the Ethereum blockchain consists of six stages: The Merge, The Surge, The Scourge, The Verge, The Purge, and The Splurge.

Updated roadmap diagram! pic.twitter.com/MT9BKgYcJH — vitalik.eth (@VitalikButerin) November 4, 2022

The diagram is divided in two: blue marks the important stages of Ethereum’s development, and green marks the completion of a particular technology.

The Merge

The first stage of The Merge is fully completed, and the second stage will focus on the so-called Single slot finality (SSF). This is the idea that Ethereum can be designed to use only one “slot” to create a block instead of 64-95 slots (about 15 minutes). In addition, this stage involves increasing the number of validators themselves, as well as starting payments to ETH stakers.

It is worth noting that after the transition to PoS, Ethereum developers have already launched the first testnet called Shandong, which is part of the Shanghai upgrade scheduled for September 2023. According to the proposal EIP-3540, the upgrade will separate code and data, making the smart contract verification process more efficient. Shanghai also includes changes to layer 2 (L2) protocols that would reduce fees by equalizing block sizes and making data transfers more efficient.

The Surge

The next stage in Ethereum’s development is The Surge. The goal of this stage is to reach 100 000 transactions per second (TPS). Now, the network processes between 10 and 20 TPS. At the heart of The Surge is the proposal EIP-4844, also known as Proto-Danksharding.

This upgrade also involves reducing the cost of transactions, including in rollup solutions, by splitting the network into several parts. Notably, Vitalik Buterin never used the word “sharding” in this roadmap, replacing it with “rollups.”

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“Rollups is a Layer 2 technology. They allow decentralized applications to merge or “roll” transactions into a single transaction off-chain, generate a cryptographic proof, and then send it to the chain,” explains Nikita Vassev, founder of TerraCrypto. This reduces the volume of data and accelerates the speed of transactions — up to 100 000 per second, the expert notes.

The Scourge

Innovation in the roadmap is the stage of The Scourge. The name itself probably refers to the video game World of Warcraft, the names from which Buterin used repeatedly during the development of the network. The goal of the upgrade is to ensure that neutral transactions are enabled reliably and credibly and to address Maximal Extractable Value (MEV) and centralization issues.

The Ethereum Foundation defines MEV as a way for miners or validators to receive additional benefits that can be obtained by creating a certain sequence of transactions when creating a block.

The main problem at this stage has been that much of MEV is extracted by independent network participants called “searchers.” They run complex algorithms to find profitable positions to extract MEV. The searchers also use special bots to process the right transactions, and these manipulations greatly increase the load on the network and result in high fees.

The Scourge also includes the proposal of Proposer Builder Separation (PBS), the essence of which is that block validation on the network should be distributed among different organizations for the sake of improving security and preventing MEV-related attacks.

According to Vassev, the upgrade also aims to solve the problem of a high proportion of censored blocks, which has arisen due to the use of MEV relays by validators. First and foremost in question are the restrictive requirements of the Office of Foreign Assets Control (OFAC), which is a division of the US Treasury Department. Vassev noted that the share of censored blocks exceeds 70%, which is an “unacceptable level” for such a large ecosystem.

The Verge

The fourth stage of the roadmap is called The Verge. Buterin noted that the main goal of the section is the full implementation of SNARK (Succinct Non-Interactive Argument of Knowledge) technology. This development is intended to strengthen the anonymity of the network while leaving the ability to track transactions if necessary.

As the founder of TerraCrypto explained, zk-SNARK is a zero-knowledge protocol, which is also used in the anonymous cryptocurrency Zcash. It allows transactions to be performed without disclosing information about the recipient, sender, or amount of the payment.

After implementing SNARK, validators will not be able to censor transactions because they will not know where the funds come from and where the coins were before, Vassev notes. The expert also suggested that once the protocol is activated, the network is likely to be as outcast as Zcash or Monero, from the point of view of US regulators.

Another important point in The Verge is the replacement of the data set, which is presented in the form of a “Merkle tree,” with another structure — the “Verkle tree.” This technology is more efficient in terms of size: it is much roomier and allows for more convenient chains for verification to be built.

The Purge

The fifth stage, called The Purge, aims to simplify the protocol, eliminate debts incurred due to technical reasons, and reduce costs by clearing old transaction history. For the last point, the proposal EIP-4444 was developed.

Now, all the data on the Ethereum blockchain takes up more than 400 GB, so to validate an entire chain of transactions, one needs to have a disk of at least 1 TB. The developers of the network want to introduce a limit on the processing of transactions that were carried out more than a year ago. This approach will allow validators to trim unnecessary data, thereby speeding up the block verification process.

Buterin also noted that “a more explicit role for quantum security” will be implemented at various stages of the Ethereum roadmap as a necessary component of the finalized protocol.

The Splurge

The final stage in the development of the entire Ethereum network at the moment is The Splurge. Its goal is to “fix everything else.” In particular, during this stage, developers will improve the Ethereum Virtual Machine (EVM). In addition, Buterin’s plans include adding a function to delete accounts.

Verifiable Delay Functions (VDF) will also be added. The main goal of VDF is to minimize the data verification time for all protocol participants.

The current state of Ethereum

Since the transition to the new consensus algorithm, the blockchain’s capitalization has dropped from $200 billion to $150 billion, according to CoinMarketCap. And since the publication of the new roadmap, the ETH rate has fallen by about 25%. According to experts at analytics firm Santiment, the top 10 OTC addresses on the Ethereum network continue to accumulate assets, adding another 6,7% of the total ETH supply to their wallets since September 15.

Nevertheless, the network continues to suffer from congestion and high fees. Another problem for Ethereum has been the regulators. Shortly after The Merge, the US Securities and Exchange Commission (SEC) initiated a review of ETH, specifically the new staking feature, for compliance with the definition of securities.

The move to PoS has demonstrated that Ethereum is an extremely resilient and evolving ecosystem. Therefore, new upgrades and announcements should be expected in the future, which are designed to make the network a true decentralized financial protocol.