In Q1/2024 EIP-4844 (Proto-Danksharding) is planned to go live on Ethereum. This will have substantial impact on the whole ecosystem, particularly L2/rollup scaling and DEXes on the according networks. With this proposal we will bring some light into the jungle of expected effects, outline our research paths and technical implementations. This will bring more clarity and enhance future outcomes for Arbitrum and Uniswap. Particularly regarding scaling, TX per second and usability of the Uniswap deployments (v3 and v4 with hooks, UniswapX) for smoother trading and AMM functioning on advanced L2 infrastructure.

Even though EIP-4844 will be a leap forward for the ecosystem we see several issues that need to be solved for a successful adaption of Proto-Danksharding. With an initial block size of ~125 kilobytes most consumers will not fill up a complete blob while with only three to six blobs per block the space will be limited. Hence, it will make sense to combine the data of several market participants (L2s / rollups) into one blob and align this efficiently. Further, with an exponential pricing function blob price volatility is a major concern that needs to be tackled early on.

Our solution space for this expands across technical implementation factors, economical incentive aspects and governmental alignment. Firstly, to identify and continuously monitor the requirements, we plan to implement a Uniswap and Arbitrum TX and mempool data dashboard. To tackle the issue of efficient blob space allocation we will explore prototypes of a blob merging solution. For the issue of blob price volatility we see economic market making mechanisms such as a derivatives market as suitable. The third pathway will be in collaboration with L2s to explore the possibilities of governance-based approaches to deal with the effects of EIP-4844.

For better readability we have outlined the more extensive application details on the following Notion page: https://ephema.notion.site/UAGP-Application-049e3ef3ed8c4da68316181ce00cd563