EIP-4844 Explained: Blobs, Fees & More

What is EIP-4844?

EIP-4844, also known as "Proto-Danksharding," is a major update introduced in the Dencun upgrade on March 13, 2024. It enables Layer 2 rollups to use blob transactions, which store data temporarily in the beacon node. This feature dramatically reduces transaction fees, in some cases lowering them to under $0.01.

Each Ethereum block can accommodate up to six blobs, with an average target of three blobs per block to maintain consistent fees and balance network demand. This upgrade lightens Ethereum’s data load, making scaling more efficient. Blobs are short-lived and are pruned after about 18 days, reducing long-term storage requirements.

EIP-4844 also sets the foundation for Danksharding, a future update aimed at further increasing Ethereum's scalability by dividing data into smaller, easier-to-handle pieces called shards.

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What are Blob Transactions?

Blob transactions, introduced by EIP-4844, allow Layer 2s to store data temporarily on the Ethereum mainnet and delete it once it's no longer required. Here’s how they work:

• Blob as a temporary container: A blob stores data for 18 days (about 4,096 epochs), unlike L1 calldata where data is stored permanently.
• Blob size and block capacity: Each blob holds up to 128 KB of data, and a block can include between 1 and 6 blobs.
• Data validation: The Ethereum mainnet needs the blob data only once for validation. After validation, the data is no longer needed, so it is deleted.
• Efficient data storage: Previously, calldata (type 2 transactions) consumed up to 85% of block space, but now, blobs (type 3 transactions) offload that storage demand thanks to KZG cryptographic commitments.

Blobs essentially act like a "sidecar" to regular transactions. Once Ethereum processes and validates the data, the "sidecar" (blob) is discarded, making it a more efficient method for managing data on the network.

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Why Was EIP-4844 Introduced?

EIP-4844 was introduced to address the high fees Layer 2 rollups paid to store transaction data on Ethereum, which made scaling more expensive than expected. Both the Ethereum community and Layer 2 developers realized that permanently storing rollup data on-chain was unsustainable, driving up gas costs on both mainnet and L2s.

The original plan was Danksharding, but its complexity made it unfeasible in the short term. Instead, Proto-Danksharding was proposed as a smaller, manageable step, leading to the development of EIP-4844.

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What are Blobspace and the Blob Gas Market?

Blobspace is a dedicated area within Ethereum’s blocks, designed for Layer 2 blockchains to post temporary data (blobs) at lower costs compared to calldata. The blob gas market manages the pricing of blob usage, keeping fees predictable while the network scales.

• Blob Target: Ethereum limits blobspace to 6 blobs per block, with a target of 3 blobs. If more than 3 blobs are used in a block, fees increase by about 12% per block to manage demand.
• Costs: Blob submission costs typically range from $0.10 to $3.00 per blob, depending on network conditions.
• Behavior in Demand Spikes: During high demand periods (like in the LayerZero airdrop), L2s either spread out their posts or switch back to calldata to avoid higher fees.
• Future Scaling: Developers are considering increasing the blob target, which would expand capacity and help prevent fee spikes during periods of high demand.

Currently, Blobs are almost at target as seen by the Dune dashboard below. The Pectra upgrade, expected as early as next year, could expand blob capacity by 2-3x, to ensure that blob demand doesn’t outpace supply, helping maintain low fees as Layer 2 usage grows.

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EIP-4844 Impact on Ethereum and Layer 2s

The implementation of EIP-4844 has already impacted Ethereum and Layer 2 networks in several economic factors. Let's take a look at them.

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Gas Fees

The introduction of blob transactions under EIP-4844 has significantly reduced gas fees across Layer 2 networks. For example, Arbitrum saw gas fees drop from $0.37 to $0.012, while Optimism experienced a similar drop from $0.32 to $0.009.

Even Ethereum’s mainnet saw a reduction in median gas fees from $6.60 to $4.30.

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Network Usage

EIP-4844 has led to a surge in Layer 2 network activity. Base, for example, has seen a 319.3% increase in daily transactions since the upgrade, while Arbitrum is up by 45.7% and Optimism by 29.8%.

Meanwhile, Ethereum’s daily transaction volume is down by 30.8%, indicating that more activity is moving to Layer 2 solutions, as expected.

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Token Price Performance

Despite the improvements in scalability and transaction costs, Layer 2 tokens have seen significant declines in price performance. Arbitrum is down 71.7%, Optimism by 61.2%, and StarkNet has dropped by 83.4%.

Ethereum has also seen a decline of 33.5%, which could be attributed to broader market conditions rather than just the effects of EIP-4844.

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Timeline of the EIP-4844 Upgrade

EIP-4844 was developed as part of Ethereum's long-term scaling efforts, with initial discussions starting in 2022 and extensive testing throughout 2023. Proto-Danksharding, went live on March 13, 2024 as part of the Dencun upgrade after a delay from its original Q4 2023 target.

Following its successful implementation, several new proposals are currently in the work:

• EIP-7623: Increases the gas cost of call data to reduce the maximum block size, now feasible since rollups use blobs.
• EIP-7762: Proposes a minimum blob base fee (~$0.01) to speed up price discovery during demand surges.
• EIP-7742: Uncouples blob count management between the consensus layer (CL) and execution layer (EL).
• EIP-7691: Suggests raising the blob target from 3 to 4 per block, while keeping the maximum at 6, to improve fee control.

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Why is it Called Proto-Danksharding?

Proto-Danksharding is named after researchers Proto Lambda and Dankrad Feist (@dankrad), who spearheaded the development of this early sharding solution for Ethereum. Dank refers to Feist’s idea of Danksharding, a method of splitting data into smaller pieces (called shards), to allow Ethereum to handle more transactions.

However, full Danksharding is not yet feasible. Sharding itself is the practice of distributing data across multiple smaller units for scalability. Proto reflects both Proto Lambda’s (@protolambda) involvement and the "prototype" nature of this upgrade, allowing developers to implement key features gradually.

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Bottom Line

EIP-4844 has significantly reduced Layer 2 transaction fees by introducing blob transactions, making Ethereum more scalable and efficient. Hopefully, after reading this article, you can also explain Proto-Danksharding and how it works, even to your non-crypto friends.

While the upgrade has already boosted onchain activity, the full impact will unfold as demand for blobspace increases. With future upgrades like Pectra, Ethereum’s scalability is set to improve even further as demand continues to grow.