Ethereum Prague Upgrade Depth Research Report: Technological Innovation, Ecological Impact, and Future Outlook

I. Introduction: A Preview of the Prague Upgrade

Since its launch in 2015, Ethereum has been at the core of technological innovation and application exploration in the blockchain industry. As a groundbreaking platform, Ethereum has led the wave of smart contracts and decentralized applications, having a profound impact in areas such as DeFi and NFTs. The technological evolution of Ethereum has transitioned from the initial PoW consensus to PoS in September 2022, always in search of more efficient, environmentally friendly, and scalable solutions. The upcoming Prague upgrade has once again sparked widespread attention.

The Prague upgrade is another important technical iteration of Ethereum, following the Cancun upgrade in March 2024, continuing to optimize network performance, reduce transaction costs, and enhance the programmability of smart contracts. Compared to previous upgrades, the Prague upgrade involves adjustments to the underlying protocol and includes a series of far-reaching EIPs, covering multiple aspects such as optimizing EVM, staking, Rollup performance, interaction costs, and storage management. These changes not only improve the overall efficiency of the mainnet but also provide a more robust infrastructure support for Layer 2, DeFi, NFTs, and more.

For developers, new features and optimizations mean more powerful development tools, more efficient smart contract execution methods, and lower computing and storage costs. For ordinary users, it may lead to improved transaction speeds, reduced fees, and a safer on-chain operation experience. Due to the enormous scale of the Ethereum ecosystem, this upgrade's impact is not limited to Ethereum itself but will also affect the entire cryptocurrency industry, especially projects that rely on Ethereum's infrastructure.

From an investment perspective, each Ethereum upgrade can potentially serve as a catalyst for changes in market sentiment. Historical experience shows that significant upgrades often lead to new expectations regarding Ethereum's prospects, affecting ETH price fluctuations. With the Prague upgrade approaching, market participants are generally focused on its potential price impact: on one hand, optimizing network performance may increase ETH usage and enhance its intrinsic value; on the other hand, whether the technical upgrade can be smoothly implemented, whether there are potential risks, and whether there will be instability in the short term may also affect market sentiment.

2. Overview of the Prague Upgrade

2.1 What is the Prague Upgrade?

The Prague Upgrade is an important update to the Ethereum protocol, inheriting and expanding upon the core goals of several previous upgrades, including optimizing network performance, reducing transaction costs, enhancing smart contract functionality, and laying the foundation for further expansion and innovation in the future. This upgrade is part of Ethereum's long-term technical roadmap, combining community consensus, developer needs, and feedback from real-world application scenarios to further enhance Ethereum's competitiveness as a leading global smart contract platform.

The Prague upgrade is carried out in the form of a "hard fork", and all nodes must update to the new version of the software to remain compatible with the network. Once the upgrade is complete, all Ethereum nodes must run clients that include the new protocol rules; otherwise, they will not be able to continue participating in network consensus. This requires developers, miners, stakers, and regular users to be well-prepared before the upgrade to ensure a smooth transition for the network.

From a technical perspective, the Prague upgrade integrates a series of optimizations that have been reviewed through EIP and discussed within the community. These optimizations involve multiple key areas such as EVM, transaction fee structure, storage management, and contract execution efficiency. The EVM, as the core execution environment of Ethereum, is responsible for handling the deployment and execution of smart contracts, so changes to the EVM may have a wide-ranging impact on the entire ecosystem. In the Prague upgrade, the EVM has welcomed new instruction set optimizations, making the execution speed of smart contracts faster while also lowering computational costs. Additionally, the upgrade optimizes Gas calculation logic, allowing for a more reasonable allocation of resources for different types of operations, reducing the issue of fee surges during network congestion.

For ordinary users, the direct impact of the Prague upgrade is reflected in the reduction of transaction costs and the improvement of execution efficiency. The issue of Ethereum's transaction fees has always been one of the most concerning aspects for users, especially during busy network periods when Gas prices can soar to extremely high levels, making small transactions expensive and even affecting the adoption of applications like DeFi, NFTs, and blockchain games. The Prague upgrade provides users with a more stable and predictable transaction cost structure by optimizing Gas calculation methods, improving transaction bundling strategies, and enhancing Layer 2 compatibility. This not only enhances the user experience but also strengthens Ethereum's competitiveness, allowing it to maintain a technological edge when facing other blockchains.

In addition, the Prague upgrade has enhanced the support capabilities for Layer 2 solutions. In recent years, the rapid development of the Ethereum Layer 2 ecosystem has greatly alleviated the congestion issues on the mainnet, allowing users to conduct faster and cheaper transactions on the second layer network through Rollup technology. However, the development of Layer 2 is still constrained by the architecture of the mainnet, as issues such as data availability, bridge security, and fund inflow and outflow delays continue to trouble developers and users. The Prague upgrade has optimized these issues, improving the Ethereum mainnet's native support for Layer 2 solutions, making the operation of the second layer network more efficient and secure. This not only aids the development of Rollup solutions but also provides technical support for the future modular blockchain architecture.

In the long run, the Prague upgrade is not just a technological improvement, but also an important step for Ethereum towards higher scalability, better user experience, and a stronger developer ecosystem. It lays the foundation for subsequent upgrades, further optimizations for Ethereum 2.0, data sharding, and other long-term plans, enabling Ethereum to continue leading the innovation trends in the blockchain industry. As the upgrade approaches, the market, developers, investors, and ordinary users are closely watching its final effects and the potential ripple effects it may have on the Ethereum ecosystem and the entire crypto industry.

3. Technical and Ecological Impact of the Prague Upgrade

The Ethereum Prague upgrade is a comprehensive hard fork focused on enhancing the scalability, security, and user experience of the Ethereum ecosystem. In this version, Ethereum has made several technical adjustments aimed at improving on-chain operations, staking mechanisms, and support for layer two networks, further promoting the development of the Ethereum ecosystem. Here are the key EIPs for the Prague upgrade:

3.1 Account Abstraction ( EIP-7702)

CA(, and can directly perform multiple operations through their EOA accounts, such as authorization and delegation. This will significantly reduce the operational costs for users, making on-chain interactions simpler and smoother.

Key significance:

• Improvement of user experience: By simplifying the operation process, users no longer need to register or manage complex accounts, reducing the entry barrier.
• The impact of DApps: For DApps like exchanges, the batch aggregation feature can reduce management costs and improve efficiency. However, it is important to note that this also brings security risks, and account abstraction may increase the complexity of permission management.

) 3.2 Optimization of the Staking Mechanism

The Prague upgrade has made several optimizations to Ethereum's staking mechanism, aiming to enhance the security and flexibility of staking operations, ensuring the decentralization and security of the Ethereum network.

EIP-6110: Optimized the staking operation, making the consensus layer no longer reliant on the voting mechanism, but directly integrating staking records with validator-related operations into the execution layer.

EIP-7251: Increase the maximum effective staking limit for a single validator to 2048 Ether, further reducing the complexity of validator management and decreasing system redundancy.

EIP-7549: Enhances the flexibility of staking operations, allowing validators to more easily perform partial withdrawals and exits.

The goal of these improvements is to ensure the security of the Ethereum network while reducing the issues of large-scale validator centralization. For users participating in staking, these optimizations provide more flexibility and opportunities for compounding returns, but they also introduce potential risks to decentralization.

3.3 Support for Layer 2 ### L2 Optimization (

With the continuous development of Ethereum's L2 ecosystem, the Prague upgrade places special emphasis on support and optimization for L2.

EIP-7623 & EIP-7691: These proposals enhance the storage and throughput capabilities of L2. EIP-7623 reduces the L2 network's reliance on calldata by increasing the gas fees for calldata in transactions; EIP-7691 expands the capacity of L2 Blobs, enhancing storage space.

Optimization of Blob: Ethereum has increased the capacity and configuration flexibility of the Blob data structure, enhancing support for L2. This will allow more L2 solutions to run on the Ethereum main chain and improve its processing capability.

These measures reflect Ethereum's efforts in building a stronger L2 ecosystem to support the needs of high-frequency trading and large-scale applications.

) 3.4 Improvement of Data Availability and Throughput

The Prague upgrade also focuses on data availability and throughput, especially support for stateless clients. For example, EIP-2935 proposes optimizations for storing historical block hashes, allowing clients to easily access the latest block data without having to store the entire history of the chain. This is significant for future optimizations such as Verkle trees, as well as applications like Rollups and oracles.

3.5 The impact of the Prague upgrade on the Ethereum ecosystem

Although the Prague upgrade itself did not generate as much market buzz as the "Merge", it plays a crucial role in the long-term development of Ethereum. The Prague upgrade makes Ethereum more adaptable to the L2 era, enhancing the network's scalability, security, and level of decentralization. With future upgrades like ### Osaka, Amsterdam hard forks, etc. (, Ethereum's functionality will be further enriched, driving it towards grand visions such as "one million transactions per second" ) The Surge ( and low centralization risk ) The Scourge (.

The Prague upgrade is an important step in the development of Ethereum. Although it has not sparked as much market discussion as "London" or "The Merge", it lays a stronger foundation for scalability and decentralization of the Ethereum network through a series of technical improvements. With account abstraction, optimized staking mechanisms, and L2 support, the Prague upgrade makes Ethereum more efficient, user-friendly, and resilient. In the future, Ethereum may continue to achieve higher network performance and lower centralization risks through a series of upgrades, further consolidating its dominant position in the blockchain ecosystem.

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4. The Challenges and Controversies of the Prague Upgrade

The Prague upgrade is an important evolution of the Ethereum network. Although it brings multiple technical improvements and optimizations, it also faces some challenges and controversies during its implementation. These challenges arise not only from the technical level but also involve the balance of interests among ecological participants and the choice of the long-term development direction of Ethereum. Below are the main challenges and controversies that may be faced during the implementation of the Prague upgrade:

) 4.1 Security Risks Brought by Account Abstraction

The EIP-7702 introduced in the Prague upgrade brings an account abstraction mechanism that allows users to implement more flexible transaction methods at the chain level. The core idea of account abstraction is to eliminate the differences in account types from the chain, so users no longer need to convert to a contract account ###CA( in advance to perform operations, but can directly use externally owned accounts )EOA( for transactions. This optimization significantly reduces the interaction costs for users and allows multiple transaction methods ) such as authorization and execution of deductions ( to be executed in parallel within a single account. However, this flexibility brings potential security risks. The introduction of account abstraction, while reducing interaction costs, also increases the complexity of user permission management. If wallet service providers fail to properly adapt to this mechanism, it may lead to unexpected security vulnerabilities. Previously, users' losses were limited to single-chain assets, but as