This proposal is a strategic move towards optimizing how Ethereum handles transaction costs.
It focuses particularly on the data aspect, which is crucial for interacting with smart contracts. Let’s discover more about this important news for Ethereum. But first, let’s see what is Ethereum’s current gas model about.
Understanding the Current Gas Model
Ethereum transactions currently incur two main types of gas fees: execution gas and storage gas. Execution gas covers the computational efforts required to perform transactions. Storage gas pertains to the costs associated with storing data on the blockchain in “blobs.”
This structured approach helps in managing the network’s resources more efficiently but has room for improvement. Especially with the increasing complexity of Ethereum-based applications.
🚀 #Ethereum gas down 93%, hitting the lowest levels since 2020! 🎉 This means cheaper swaps and minting #NFTs for everyone.
Yet, experts like @VitalikButerin warn of future congestion and fee hikes. Miners are seeing profits dive, raising questions about decentralization. $ETH pic.twitter.com/uaBkhEZ5vp
— Cryptogeek (@the_Cryptogeek) May 14, 2024
EIP 7706: A New Approach to Call Data
Buterin’s EIP 7706 introduces a third type of gas fee solely dedicated to call data. This is the portion of a transaction that carries essential information to smart contracts. The proposal suggests a new method where Ethereum will charge separately for the data transferred during transactions. This cost will be distinct from the charges for executing contract code or data storage. This could significantly streamline the pricing model for transactions that are data-heavy but low on computational demands.
The proposed model will not only add a new transaction type that categorizes fees into execution gas, blob gas, and call data gas. Also, it will integrate max_basefee and priority_fee as vectors. This means a unified adjustment mechanism could be employed for all three types of fees, potentially leading to more efficient transaction processing and reduced costs for users.
Ethereum $ETH update and outlook:
Ethereum co-founder Vitalik Buterin has introduced Ethereum Improvement Protocol (EIP) 7706, proposing a new gas model overhaul.
This update focuses on introducing a third form of gas exclusively for call data in Ethereum transactions, aiming… pic.twitter.com/oHx7tfqYl8
— alpha CAPCOM (@alphacapcom) May 14, 2024
Implications of the New Gas Model
Buterin points out that with the separate charging for call data, the maximum allowable call data size per block could significantly decrease. However, this would make call data generally cheaper, according to basic economic principles, as it would likely reduce the average cost per transaction.
Managing all three forms of gas through a dynamic model that adjusts fees based on real-time network conditions is expected to lead to an optimized and more cost-effective fee structure. Here is Vitalik’s post about this proposal:
Multidimensional gas pricing:https://t.co/ArZb8oEzCd
— vitalik.eth (@VitalikButerin) May 9, 2024
Looking Ahead
If EIP 7706 is adopted, it could lead to substantial changes in how developers and users approach Ethereum transactions. By potentially lowering the costs for data-heavy transactions, this new model may encourage more innovative uses of Ethereum’s smart contracts and further diversify the applications running on its network.
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