- Ethereum developers are considering a key improvement to the Layer 1 chain.
- The proposal has stoked excitement at the potential of interest returning to the Layer 1 chain.
- Still, the proposal may also pose some downsides.
In recent weeks, the Layer 2 focus of Ethereum ‘s roadmap has come under intense scrutiny . Following the March 2024 Dencun upgrade that drastically brought down fees across rollups, Layer 2 chains have been accused by some of being parasitic.
For one, these Layer 2 chains have driven a large amount of activity from the Layer 1 chain, leading to a decrease in ETH burns and making the asset inflationary as a result . At the same time, these networks have seen a significant profit surge while remitting very little to the Layer 1 chain, which has seen revenues plummet. Furthermore, ETH’s price has continued to underperform fellow market leaders Bitcoin (BTC) and Solana (SOL) due to the reduced demand.
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Amid growing concerns, there have been calls for a shift of focus back to improving the Layer 1 chain. These calls have now been met with a proposal that promises to significantly enhance the transaction execution experience on the mainnet. Can this proposal shift power back to the Layer 1 chain?
Ethereum Community Mulls EIP-7781
Ethereum developers are considering a key improvement to the Layer 1 chain. Over the weekend, the community has been discussing EIP-7781 , a proposal submitted by Illyriad co-founder Ben Adams on October 5 to reduce slot time from 12 seconds to eight seconds.
Slot time refers to the fixed time within which a block may be proposed and added to the Ethereum network. By reducing the slot time, the network will produce blocks more frequently, ideally leading to faster transaction processing and confirmation for users. As such, Adams’ proposal has sparked significant excitement within the Ethereum community, especially as it has received the endorsement of prominent Ethereum researcher Justin Drake.
Drake tipped the proposal to increase the network’s overall throughput by a staggering 50% and make decentralized exchanges like Uniswap more efficient.
This throughput boost will also be transferred to ‘based rollups,’ these are rollups that have their transactions ordered by Ethereum validators. Commenting on this Layer 2 impact, Matthew Sigel, head of digital assets research at VanEck, tipped the proposal to shift power back to the Ethereum Layer 1 by incentivizing rollups to use based transaction sequencers that require validators to hold ETH.
Despite these potential benefits, EIP-7781 still raises some concerns.
No Free Lunch?
A major concern around EIP-7781 that several community members have raised is its potential effect on validators. Reducing slot time means validators are put under higher strain and may require upgraded hardware, a shift that could be particularly discouraging of solo validation, worsening centralization concerns.
At the same, there are concerns that more frequent block production could open the network to Distributed Denial of Service (DDoS) attacks if validators can not keep up with the pace of block production.
On the Flipside
- Despite concerns that Ethereum is not prioritizing Layer 1 developments, Ethereum co-founder Vitalik Buterin has maintained that Layer 1 development efforts are happening in parallel with Layer 2.
- Even with community support, EIP-7781 is unlikely to be implemented on the Ethereum mainnet till late 2025, as developers have already agreed on the upgrades to include in the first part of Pectra , the network’s next major hard fork set to go live in the first half of 2025.
Why This Matters
Following the Dencun upgrade, interest has significantly shifted away from Ethereum to Layer 2 chains at the cost of ETH demand and tokenomics. EIP-7781 promises to return interest to the Layer 1 chain while incentivizing greater Layer 2 alignment.
Read this for more on Ethereum:
Why Ethereum’s Rollup-Centric Roadmap Is Not “Done” According to Vitalik
Learn more about Coinbase’s decision to delist non-compliant stablecoins in the EU:
Coinbase to Ax Non-Compliant Stablecoins in the EU: Here’s What We Know
