Ethereum transitioned to the proof-of-stake consensus mechanism successfully, marking a huge step in the development of the blockchain towards making it more sustainable, secure and scalable. But that’s not all. The merge was, in fact, just the first major step of Ethereum’s ongoing development roadmap which also includes the Surge, Verge, Purge and Splurge.
According to Ethereum’s co-founder Vitalik Buterin, Ethereum will be able to process "100,000 transactions per second", following the completion of 5 key phases, which started with the merge and the switch to proof-of-stake.
Let’s take a closer look at Ethereum’s vision and what it includes.
The Ethereum protocol was launched in 2015 and enjoyed great success. But even back then it was pretty clear for the community that in order to unlock its full potential, the blockchain had to undergo a few key upgrades. And the transition to Proof-of-Stake was at the core of this.
The main downside of Ethereum were the increasing gas fees, which made Ethereum expensive for most users. As the blockchain was growing, so did the disk space required to run clients, resulting in higher costs to maintain. Additionally, its original proof-of-work consensus mechanism, which was changed with the Merge, was causing a big environmental impact due to the large energy consumption it required.
In order to address these issues, the community behind Ethereum devised a set of upgrades to re-architect the blockchain, while preserving its core value of decentralization.
The ultimate goal of Ethereum is to be more scalable and secure, but also to remain decentralized. Achieving these goals is a problem known as the scalability trilemma.
Solving any trilemma is not an easy task and Ethereum’s is no exception. The blockchain improvement is a gradual process and switching to PoS is seen as the foundation of all upcoming upgrades. The community has been preparing for this for years and postponed the Merge several times due to the complexity of its execution.
The Merge is the actual merging of the original Ethereum Mainnet with a separate proof-of-stake blockchain called the Beacon Chain, created in December 2020 and running in parallel. After the Merge, the Beacon Chain became the consensus engine for all network data, including execution layer transactions and account balances.
Mining has been switched off and is no longer the means of producing valid blocks. Instead, Ethereum is now secured by a network of validators who are now responsible for processing the validity of all transactions and proposing blocks.
One of the motivations behind the transition to Proof-of-Stake (PoS) was to reduce the power consumption necessary for securing the network. According to the official Ethereum website, the Merge reduced its energy consumption by approximately 99.95 percent.
But not only. The new consensus mechanism changes the reward and penalty system for the network participants, making it harder to execute attacks and disruptions. The validating nodes have staked ETH in return for the right to participate in consensus. If they make an attempt to execute an attack on the network, the protocol can automatically destroy their ethers as a punishment.
Since Ethereum moved to proof-of-stake, the focus has been shifted to the Surge upgrade. Unlike the Merge, the Surge is going to happen over several stages, multiplying on each other and providing concrete value to achieving its ultimate goal - processing up to 100 000 transactions per second.
In short, the Surge is about increasing the capacity of transaction processing by introducing sharding. It combines layer 1 data processing solutions with layer 2 technologies like rollups.
Currently, Ethereum can process on average 13 transactions per second, making the network pretty busy and leading to skyrocketing fees.
The idea behind sharding is to split the load on the network among 63 shards, or in other words, to create mini chains inside of Ethereum that would be able to process tens of thousands of transactions per second. This will also lighten the load for each validator who will no longer be required to process the entirety of all transactions across the network. Instead, they can use data techniques to confirm that the data has been made available by the network as a whole.
Sharding will work synergistically with layer 2 rollups by splitting up the burden of handling the large amount of data needed by rollups over the entire network.
Rollups allow dApps to combine transactions into a single transaction off-chain, generate a cryptographic proof and then send it to the main Ethereum chain. This improves efficiency, reduces the transaction data and thus lowers the load on the main network. The rollups and data compression will also lead to lower fees and increased blockchain adoption.
In combination with the availability of the shards, this is set to significantly increase the number of transactions per second.
Sharding could come into play in 2023 or 2024 following up a series of upgrades. The initial idea of the ETH community was to launch sharding before the Merge, but later it decided to do it after.
It is still not clear when and exactly how it will happen as the plans for sharding are evolving as the community explores and develops more efficient paths to scaling.
The latest approach to sharding introduced by Ethereum’s co-founder Vitalik Buterin is known as "Danksharding". It does not utilize the concept of shard "chains" but instead uses shard "blobs" to split up the data, along with "data availability sampling" to confirm all data has been made available. This change in plan solves the same original problem.
So, what comes after the Surge?
The Verge upgrade is set to reduce the amount of data that network validators have to store on their machines by introducing Verkle trees. It’s an upgrade to Merkle proofs that allows for much smaller proof sizes, according to Buterin.
The Verkle trees are part of a broader roadmap for making Ethereum stateless - another complex concept that is still evolving. In its essence, the proposal aims to introduce stateless clients, where validating nodes don't have to store state data before verifying blocks. It will lower the hardware requirements for running a node, strengthening the decentralization and resilience of the Ethereum network. The concept was first proposed by Buterin in 2017 and is still undergoing research and development by the community.
Verkle trees do require more complex cryptography to implement, but they present the opportunity for large gains to scalability. Their introduction will optimize storage and let users become network validators without storing large amounts of data on their machines. Instead of needing to provide all "sister nodes" at each level, the prover needs only to provide a single proof that proves all parent-child relationships between all commitments along the paths from each leaf node to the root.
The suggested roadmap includes three hard fork upgrades that will set the ground for achieving the goal of the Verge and the changes required for statelessness.
The first upgrade that will happen is named “Shanghai”. Its purpose is to make changes to the gas cost and bring the cost for state access closer to the cost of witnesses. According to the official roadmap, this is needed to be implemented before switching to verkle trees as gas fees are an important signal for optimization to smart contract developers and will prompt them to take action.
The next hard fork “Shanghai+1” will amend the commitment scheme. During the upgrade, the Merkle Patricia Trees (MPT) current state root will be frozen and a Verkle tree commitment will be added, which will be initially empty. All state changes from that point onward will be recorded to this root, and will not affect the frozen MPT.
The actual replacement of the frozen MPT root with Verkle tree root will happen during the second upgrade “Shanghai+2”. These two upgrades are technically complex to execute and if they pose technical challenges, the community may have to postpone them.
The goal is to achieve “optimal statelessness” leading to reasonably small witness sizes that are quick to verify and easy to produce, typically taking a few seconds to compute.
This is all set to help to decentralize the network further.
The Purge includes several upgrades to remove old network history and simplify the network over time. This will reduce the historical data storage and the technical debt of the Ethereum protocol, significantly lowering the hard disk requirements for node operators.
The Purge also aims to introduce history expiration (EIP-4444), meaning that not all node operators will be required to store all previous blocks data. Instead, clients will stop serving historical data on the p2p network that is more than one year old. This proposal sets history prune epochs to 82125 epochs (one year).
This upgrade will also provide nodes the option to locally prune this historical data. Once a node client has synced the tip of the chain, historical data won’t be necessary for validating blocks and is only retrieved with an explicit request over JSON-RPC or when a peer attempts to sync the chain.
With the implementation of this proposal, new nodes will use a different syncing mechanism, since the historical data will no longer be available. Instead, they will start syncing with a method labeled as “checkpoint sync”. It will sync the chain from the most recently finalized checkpoint block instead of the genesis block.
A specialized “full sync” client will be built that will allow anyone who still wants to get the entire Ehtereum data from the genesis block.
Pruning history reduces the disk requirements and also allows clients to remove code that processes different versions of historical blocks.
In combination with all previous stages of the roadmap, this should reduce network congestion and enable the Ethereum blockchain to execute many more transactions.
The Splurge is defined as a series of smaller upgrades aimed to ensure that the network runs smoothly following the previous four major updates. It will combine several improvement proposals that didn’t fit in the other upgrades and will add final touches to the vision for improving the blockchain.
Ethereum's co-founder Buterin has described this last phase as “the enjoyable stuff once all of the preceding phases have merged”.
As we know how long it took to execute the Merge, it’s quite likely that most of these technological advancements will prolong over time and undergo some amendments. By the time we get to the Splurge, the Ethereum network will be quite different from what we know today and will operate under new rules.