Ethereum upgrades to watch for in 2023
The DeFi hype, EIP-1559, NFT mania, the crypto crash, and the Merge: it's been a few busy years for Ethereum.
The DeFi hype, EIP-1559, NFT mania, the crypto crash, and the Merge: it's been a few busy years for Ethereum. But what can we actually expect in 2023?
In 2022, the Ethereum (ETH) community focused mainly on the Merge. Throughout the year, many investors eagerly awaited this historic upgrade. The fact that the ETH rally fell short disappointed a lot of investors. But The Merge is just the start of a series of upgrades that are expected to improve the Ethereum network further. According to Ethereum mastermind Vitalik Buterin, with The Merge we're a little over halfway through the entire Ethereum roadmap.
The Ethereum roadmap
There are a few things left to improve to make the ETH network ready for the masses. The network still needs to scale further, bugs must be fully ironed out, and the Ethereum developer community has a big job to do to ensure long‑term decentralization of the blockchain. At the last two Ethereum developers conferences there was more clarity about the ETH Roadmap 2023. According to the developers, the priority in 2023 will be enabling Ethereum staking withdrawals and further scaling Layer 2 networks.
ETH staking withdrawals
At the recent conference, developers agreed to give stakers the ability to cash out staked Ether by the end of the first quarter of 2023. An upgrade to enable this is expected to be relatively straightforward to implement, according to the developers, and will finally give stakers access to their ETH and staking rewards after more than two years.
The provisional date for the upgrade is set for March 2023. Since multiple test phases for the upgrade have already been run and more are planned in January and February, developers are fairly confident they will meet the deadline.
Some fear the upgrade could trigger a sudden sell-off of ETH. According to developers, this concern is unfounded. While there will likely be some selling pressure from the upgrade, it's unlikely to cause a big dump.
Layer 2 scaling with EIP-4844
The next on the roadmap is EIP-4844, also known as proto-danksharding. EIP-4844 lowers transaction costs for Layer 2 rollup technologies. It introduces a new transaction type ("data blobs") specifically for moving Layer 2 data to the Ethereum Mainnet. As a result, transactions on Layer 2 networks like Arbitrum or Optimism won't have to compete with existing ETH transactions.
According to the developers, this could make Layer 2 fees up to 100x cheaper. EIP-4844 will be built into an upgrade planned for May or June 2023, named "Cancun."
Upgrades for the EVM
Another upgrade, earlier than EIP-4844, will improve the Ethereum Virtual Machine (EVM). The EVM is a program that runs on the ETH blockchain. It's used to execute smart contracts stored on the Ethereum blockchain.
In the past seven years, there have been only minor changes to the Ethereum Virtual Machine. This year, for the first time, five major improvements will be made. The updates are aimed at lowering gas costs for developers of decentralized apps, simplifying the deployment of smart contracts in the Ethereum ecosystem, and preparing the EVM code for the future. The latter is described by developers as the most important change, because it will make future EVM upgrades much easier and ensure the EVM remains the best virtual machine for running smart contracts.
Developers want to roll out the EVM improvements by the end of March. It is not yet clear whether all EVM updates will be included in the upgrade.
