Ethereum Prague Upgrade In-Depth Research Report: Technological Innovations, Ecological Impact, and Future Outlook

1. Introduction: Prague Upgrade Outlook

Ethereum has been leading blockchain technology innovation since its launch in 2015. From the initial PoW consensus to the transition to PoS in September 2022, Ethereum has been continuously pursuing more efficient, environmentally friendly, and scalable solutions. The upcoming Prague upgrade has once again attracted widespread attention from the market.

The Prague upgrade is an important technical iteration of Ethereum, which will continue to optimize network performance, reduce transaction costs, and enhance the programmability of smart contracts. It involves underlying protocol adjustments and multiple EIP proposals, including optimizations to the EVM, staking mechanisms, Rollup performance, and more. This not only improves the efficiency of the mainnet but also provides more robust infrastructure support for Layer 2 and other solutions.

For developers, new features mean more powerful tools and more efficient smart contract execution. For regular users, it may bring improved transaction speeds and lower fees. For the entire cryptocurrency industry, the impact of the Prague upgrade will affect many projects that rely on Ethereum infrastructure.

From an investment perspective, major upgrades to Ethereum are often catalysts for market sentiment. The Prague upgrade may enhance the usage and intrinsic value of ETH, but the risks of technical implementation could also affect short-term market performance.

2. Overview of the Prague Upgrade

The Prague upgrade is an important update to the Ethereum protocol, inheriting and expanding upon the goals of several previous upgrades. It combines community consensus, developer needs, and feedback from application scenarios, aiming to further enhance Ethereum's competitiveness.

From a technical perspective, the Prague upgrade integrates a series of EIP proposals, involving multiple key areas such as EVM, transaction fee structure, and storage management. The EVM welcomes a new instruction set optimization, improving the execution efficiency of smart contracts. The Gas calculation logic has also been improved, making resource allocation more reasonable.

For ordinary users, the direct impact of the Prague upgrade is reflected in reduced transaction costs and improved execution efficiency. By optimizing Gas calculations and improving transaction bundling strategies, it provides users with a more stable transaction cost structure.

In addition, the Prague upgrade has enhanced support for Layer 2. It has optimized issues such as data availability and bridge security for Layer 2, providing a more efficient and secure operating environment for second-layer networks.

In the long run, the Prague upgrade is an important step for Ethereum towards higher scalability and better user experience. It lays the foundation for subsequent upgrades and Ethereum 2.0, driving Ethereum to continue leading innovation in the blockchain industry.

3. The Technical and Ecological Impact of the Prague Upgrade

The Prague upgrade is a comprehensive hard fork of the Ethereum network, aimed at enhancing scalability, security, and user experience. The main technical improvements include:

3.1 Account Abstraction ( EIP-7702)

The introduction of account abstraction mechanisms allows users to perform various operations directly through EOA accounts, simplifying on-chain interaction processes and reducing operational costs. This will significantly enhance user experience, but it also brings potential security risks that wallet service providers need to adapt to correctly.

3.2 Staking Mechanism Optimization

• EIP-6110: Integrate staking records with validator operations into the execution layer
• EIP-7251: Increase the maximum staking limit for a single validator to 2048 Ether
• EIP-7549: Increases the flexibility of staking operations, supports partial withdrawals and exits.

These improvements aim to enhance staking security and flexibility while reducing the centralization issues of validators.

3.3 Layer 2 Network Support

• EIP-7623 & EIP-7691: Enhance L2 storage and throughput capacity
• Blob Optimization: Increase Blob data structure capacity, enhance L2 support

These measures reflect Ethereum's efforts to build a stronger L2 ecosystem to support high-frequency trading and large-scale applications.

3.4 Data Availability and Throughput Improvement

EIP-2935 optimizes the storage of historical block hashes, facilitating client access to the latest block data. This is of great significance for future applications such as Verkle trees and Rollups.

The Prague upgrade makes Ethereum more suitable for the L2 era, enhancing the network's scalability, security, and decentralization levels. It lays the foundation for Ethereum to achieve the vision of "millions of transactions per second" and low centralization risk.

4. Challenges and Controversies of the Prague Upgrade

Despite the numerous technical improvements brought about by the Prague upgrade, its implementation process also faces some challenges and controversies:

4.1 Security risks brought by account abstraction

Account abstraction simplifies interactions, but it also increases the complexity of permission management. If wallet service providers do not adapt properly, it may lead to security vulnerabilities, resulting in cross-chain losses or phishing attacks.

Challenges and Scalability Issues of L2 Ecosystem 4.2

L2 optimization may lead to an increase in costs for some ecosystems. The interoperability issues between L2s remain to be resolved, and the dispersion of liquidity and security may affect ecological stability.

4.3 Adaptability Issues for Communities and Developers

The introduction of new technologies may require developers to restructure existing DApps, bringing short-term adaptation pressure. The community's acceptance of some technical solutions varies, which may lead to further controversy.

4.4 Market Reaction and Competitive Chain Pressure

Ethereum is facing competitive pressure from other public chains and Layer 2 solutions. If upgrades do not timely attract developers and users, it may affect its market position. How to enhance performance while maintaining decentralization characteristics remains a focal point of market attention.

5. Future Outlook

The Prague upgrade lays an important foundation for the future development of Ethereum and will have far-reaching impacts in multiple aspects:

5.1 A more efficient multi-chain ecosystem center

Ethereum will become a multi-chain center, achieving cross-chain collaboration with other public chains. The maturity of Layer 2 technology will accommodate more DApps, making Ethereum the core hub for DeFi and asset management.

5.2 Further development of DeFi

Reduced transaction fees and increased throughput create conditions for the expansion of the DeFi ecosystem. New trading models, efficient lending markets, and others will gradually mature, creating a richer array of financial products.

5.3 The NFT and digital art market is booming.

Low transaction fees and efficient contract execution facilitate the creation and trading of NFTs. NFT applications will expand into more fields such as gaming and music, promoting the development of the digital art market.

5.4 Improvement of Decentralized Governance

The optimization of the staking mechanism and the enhancement of validator diversity make Ethereum governance more open and decentralized. The improvement of the DAO model will promote more decisions to be made through community consensus.

In summary, the Prague upgrade brings significant technological advancements to Ethereum. In the future, Ethereum will continue to break through in areas such as performance, ecological diversity, and decentralized governance, providing global users with a more efficient, secure, and decentralized blockchain platform.