EIP Fun Weekly #37: Issuance Curve Adjustment Proposal
Explore the potential of EIP-2357 and join the wave of Issuance Curve Adjustment Proposal in Electra upgrade!
Hello everyone! Welcome to read the 37th issue of EIP Fun Weekly. Let's take a look at what happened in the EIP community this week.
EIP Updates
First, let's review some of the key meetings this week and the formal changes to EIPs.
AllCoreDevs Execution Layer Meeting #182
The AllCoreDevs meetings alternate weekly between ACDC (consensus layer focus) and ACDE (execution layer focus) to guide Ethereum protocol forks. Core EIPs related to protocol changes are typically discussed here more with developers than editors.
Takeaways
1.Dencun updates
EF DevOps engineer Barnabas Busa announced the Dencun upgrade's scheduled activation on the Ethereum mainnet for March 13, 2024.
The Goerli test network will be deprecated, urging users to transition to a different Ethereum testnet by April 17.
2.Account Abstraction EIPs for Pectra:
During a dedicated meeting, developers discussed the objectives and potential EIP implementations for Account Abstraction (AA) in both the short and long term.
Vitalik Buterin highlighted the need for an account system that supports key rotations, quantum resistance, and other features beyond externally owned accounts (EOAs).
Three main EIPs, 3074, 5806, and 7377, were evaluated, with debates focusing on transaction signing, decentralized transaction sponsorship, and complexity. While EIP 7377 received less controversy, developers agreed to continue discussions on these EIPs in the coming weeks without reaching a consensus yet.
Further Reading
Ethereum All Core Developers Execution Call #182 Writeup by Christine Kim: https://www.galaxy.com/insights/research/ethereum-all-core-developers-execution-call-182/
EIP Status Change
Here is EIP that has been approved for a status change:
EIP-2537: Precompile for BLS12-381 curve operations
Status: Draft → Review
Abstract: EIP-2537, also known as the Diamond Standard, is an Ethereum Improvement Proposal that introduces a standard for creating upgradeable and reusable smart contract libraries called Diamonds. It allows developers to build modular, interoperable solutions by combining and linking these Diamonds together. The Diamond Standard enables efficient contract upgrades without disrupting functionality or compromising security. It promotes code sharing, reduces redundancy, and fosters a collaborative ecosystem on the Ethereum blockchain.
EIP of the Week
Then let's take a look together at the applications or developments related to EIPs this week.
New ERC: Inscription In Smart Contract
This EIP suggests a standardized approach to enable tokens to be traded as both fungible and non-fungible tokens on the Ethereum blockchain. It allows tokens to be flexible and function in various capacities. Additionally, this standard includes a provision for embedding inscription data within event data. This enhancement allows for the inclusion of immutable additional information directly on the Ethereum network.
Why propose it?
Since March 2023, inscriptions have gained recognition as a new form of asset issuance within the market. The fundamental concept behind inscriptions is to embed specific data or information into the blockchain in an unchangeable manner, ensuring tamper-proof characteristics and permanent storage. While inscriptions cannot be computed and processed directly on-chain in the Bitcoin network, the community widely acknowledges the pattern of storing data on-chain and interpreting it off-chain. This approach maintains the integrity and authenticity of the data and demonstrates the potential of blockchain technology in data ownership.
However, the current implementations of inscriptions have several limitations. Although the Ethereum Virtual Machine (EVM) provides a powerful environment for executing smart contracts with complex logic and interactions, the application of inscriptions on the EVM is predominantly limited to simple data recording. This underutilization hinders the potential of inscriptions, particularly in scenarios that require on-chain logic processing and interaction with smart contracts.
Therefore, it is crucial to develop an Ethereum Improvement Proposal (EIP) that standardizes the handling of inscription assets. This proposed standard would not only facilitate the effective utilization of inscription data but also unlock new application scenarios such as on-chain copyright management, data ownership verification, digital identity authentication, and more. By establishing an inscription asset protocol within the EVM, we can integrate inscription data into the EVM's computational capabilities, thereby expanding the range of inscription usage in decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain applications.
Further Reading
FEM forum discussion: https://ethereum-magicians.org/t/discussion-on-erc-7583-for-inscribing-assets-in-smart-contract/17661
EIP-7610: Revert creation in case of non-empty storage
EIP-7610 is a proposal for a new Ethereum Improvement Proposal (EIP) that suggests introducing a new opcode called "KYC" to the Ethereum Virtual Machine (EVM).
Why propose it?
The opcode is intended to provide a standardized approach for implementing Know Your Customer (KYC) processes within smart contracts on the Ethereum blockchain. This EIP aims to enhance the compliance and regulatory capabilities of decentralized applications (dApps) by enabling the verification and validation of user identities on-chain, facilitating the integration of KYC requirements within smart contracts. The introduction of EIP-7610 could potentially support a wide range of applications that require KYC compliance, including financial services and decentralized exchanges.During the ACDE 128 conference last week, EF researcher Ansgar Dietrichs presented a potential proposal for Electra concerning staking rewards.
What’s its potential use?
The main use case of EIP-7610 is to enable and standardize Know Your Customer (KYC) processes within smart contracts on the Ethereum blockchain. By introducing the "KYC" opcode, this proposal allows decentralized applications (dApps) to verify and validate user identities on-chain, directly within the smart contract code. This can be particularly useful for applications that require compliance with KYC regulations, such as financial services, decentralized exchanges, or any other application that needs to verify the identity of users interacting with the smart contract. EIP-7610 helps streamline the integration of KYC requirements and enhances the compliance capabilities of dApps on the Ethereum network.
Further Reading
FEM forum discussion: https://ethereum-magicians.org/t/eip-7610-revert-creation-in-case-of-non-empty-storage/18452
Anecdote of the Week: Issuance Curve Adjustment Proposal
During the ACDE 128 conference last week, EF researcher Ansgar Dietrichs presented a potential proposal for Electra concerning staking rewards.
Why adjust the issuance policy?
The proposal stems from the significant increase in demand for staking among Ethereum (ETH) holders, largely due to the accessibility provided by liquid staking providers like Lido. Currently, more than a quarter of the total ETH supply is staked, and this percentage is expected to continue growing.
Dietrichs, along with his colleague Caspar Schwarz-Schilling, argues in their proposal that a high staking ratio has negative consequences for the Ethereum protocol. These repercussions include an increased load on peer-to-peer networking, unnecessary dilution of ETH value, and an overreliance on third-party smart contract protocols, such as Lido, for network security.
Their proposal aims to address these negative externalities and find solutions to mitigate the potential risks associated with an increased staking ratio.
What’s the potential impact of the new issuance policy?
The new issuance policy, which caps dilution at around 0.4%, addresses concerns about dilution for ETH holders compared to the current curve that can approach 1.5% dilution. It also mitigates reward variability for solo stakers and maintains appropriate incentives for consensus duties.
Implementing this proposal is straightforward and avoids technical complexities or resource limitations. While the new issuance curve doesn't guarantee an upper limit for staking participation, it significantly reduces the net incentive to stake by decreasing dilution.
Although the nominal yields decrease by approximately 30% at current staking levels, a hypothetical longer-term supply curve could lead to higher real yields in equilibrium, which is a preferable outcome for all stakers compared to the current issuance policy.
Further Reading
FEM forum discussion: https://ethereum-magicians.org/t/electra-issuance-curve-adjustment-proposal/18825
EIP Events
EIP Editing Office Hour Meeting #33
Date & Time - March 5, 2024, at 16:00 UTC
For more details about the meeting agenda, you can visit this GitHub issue.
AllCoreDevs Consensus Layer Meeting #129
Date & Time - March 7, 2024, at 14:00 UTC
For more details about the meeting agenda, you can visit this GitHub issue.
That's all for this week from EIP Fun. EIP Fun is created and supported by LXDAO and PlanckerDAO. We aim to serve as the “layer 2” of the EIP ecosystem, simplifying and accelerating the adoption of EIPs.
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