The highly anticipated Ethereum upgrade (“The Verge”) will significantly change node operations on its network. Node operations will soon become viable on everyday devices such as phones and smartwatches with the extremely low hardware requirements it would present.
This development is another step toward increasing the accessibility and scalability of Ethereum to make it more secure, with a view toward the decentralization of node operations. Ethereum co-founder Vitalik Buterin said this update will enable smartphones and smartwatches to host Ethereum nodes in the near future.
Ethereum’s Verge: Reducing Hardware Barriers
An issue that has been commonly faced in the years with Ethereum is the growing amount of data needed to continue running a node. Currently, maintaining an Ethereum node forces users to handle “hundreds of gigabytes of state data.”
Such hardware demands have created an entry barrier for those willing to participate in the network. The Verge introduces stateless verification — a process that enables nodes to verify blockchain transactions without keeping huge data.
As Buterin explained in a recent blog post, this process would make verifications on the Ethereum blockchain comparatively cheaper than other blockchains. As a result, devices like mobile wallets, browser wallets, and smartwatches can take part in node operations.
The latter is especially relevant to solo stakers, who previously needed to invest heavily in computational power to take part in Ethereum staking. By reducing the load of data, Verge opens possibilities for solo contributors and smaller players to take part in node operations using less powerful devices.
Verkle Trees and Their Function in The Verge
Verkle trees are one of the cryptographic structures at the heart of stateless verification. Initially, The Verge was going to employ Verkle trees by default to keep proof sizes contained.
However, Buterin mentioned that Verkle trees might be sensitive to quantum computing and open up security vulnerabilities in the long run. Another step taken by the developers for scalability and long-term security is a development based on Scalable Transparent Arguments of Knowledge-based binary hash trees.
Change in the Ethereum Gas Fee Mechanism
Another central element of the upgrade is the changes to the network’s gas fee mechanism under the Ethereum Improvement Proposal, EIP-4762. The gas fees for resource-intensive cryptographic operations would be altered to boost stateless verification.
It adds “multidimensional gas” to better manage Ethereum’s resources. Multidimensional gas constitutes the separation of cost for call data, computation, and state access.
By making node operation possible with smaller devices, The Verge democratizes staking. Thus, solo stakers can participate in network operations without any multi-thousand-dollar hardware.
While the upgrade to Ethereum promises long-term benefits, the cryptocurrency markets currently remain particularly volatile. The second-largest day of liquidation in October occurred on Wednesday.
Total crypto liquidations reached $261 million as BTC and Ether prices slipped, with long positions accounting for $203.5 million of that figure. In contrast, $77 million in Ethereum long positions were liquidated, with the price of the leading altcoin dropping from a 24-hour high of $2,620 to $2,552.
This was the largest liquidation day in Ether in October, furthering bearish market sentiments. The fall in Ether’s price comes after a significant rally, during which it rose to a two-month high of $2,750 on October 21.
Transaction Costs in the Ethereum Network
While Ethereum’s development continues to focus on scalability and improving accessibility, transaction costs remain a significant hurdle to many users. Meanwhile, institutional interest in Bitcoin remains stronger than in Ether.
US-based spot Bitcoin ETFs posted a net inflow of $198.5 million on October 23, led by BlackRock’s iShares Bitcoin Trust ETF, which raked in $323.6 million. However, the inflow trend was offset by outflows from other ETFs, notably $99 million from the ARK 21Shares Bitcoin ETF.
In contrast, US Spot ETH ETF noted a net inflow of $1.27 million, with Grayscale’s ETHE noting the highest outflows at $7.61 million. Spot Ether funds of Fidelity, Invesco, and 21Shares noted inflows of $6.25 million, $1 million, and $1.62 million, respectively.
