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

1. Introduction: Prague Upgrade Preview

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

The Prague upgrade is another important technological iteration of Ethereum, following the Cancun upgrade in March 2024. It continues to optimize network performance, reduce transaction costs, and enhance the programmability of smart contracts. It involves adjustments to the underlying protocol and several far-reaching EIPs, including optimizations to the EVM, staking, Rollup performance, reduced interaction costs, and improved storage management. This not only enhances the overall efficiency of the mainnet but also provides more robust infrastructure support for Layer 2, DeFi, NFTs, and more.

The Prague upgrade means more powerful development tools, more efficient smart contract execution methods, and lower computing and storage costs for developers. For ordinary users, it may bring improvements in transaction speed, reduced fees, and a more secure on-chain operation experience. Due to the large scale of the Ethereum ecosystem, the upgrade's impact will extend throughout the cryptocurrency industry, particularly affecting projects such as Layer 2, cross-chain bridges, and DEX that rely on Ethereum infrastructure.

From an investment perspective, significant upgrades to Ethereum often serve as key catalysts for changes in market sentiment. As the Prague upgrade approaches, the market is generally focused on its potential price impact: optimizing network performance may increase the utilization and intrinsic value of ETH; however, whether the technical upgrade can be implemented smoothly, whether there are risks, and whether there will be short-term instability may also affect market sentiment.

II. 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 objectives of several previous upgrades, including optimizing network performance, reducing transaction costs, and enhancing smart contract functionality, laying the foundation for future expansion and innovation. As part of Ethereum's long-term technical roadmap, it combines 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 will be implemented in the form of a "hard fork", and all nodes must update to the new version of the software to maintain compatibility. The upgrade will be activated at a specific block height and will be implemented network-wide. Once completed, all Ethereum nodes need to run clients that include the new protocol rules, or they will not be able to continue participating in network consensus. This requires developers, miners, stakers, and regular users to prepare in advance to ensure a smooth transition for the network.

From a technical perspective, the Prague upgrade integrates a series of optimizations that have been reviewed by EIP and discussed by the community. It involves several key areas such as EVM, transaction fee structure, storage management, and contract execution efficiency. As the core execution environment of Ethereum, any changes to the EVM could have a wide-ranging impact on the ecosystem. The Prague upgrade optimizes the EVM instruction set, improving the execution speed of smart contracts and reducing computational costs. At the same time, it optimizes Gas calculation logic, allowing for more reasonable resource allocation for different operations and reducing the issue of fee surges during network congestion.

For ordinary users, the impact of the Prague upgrade is directly reflected in the reduction of transaction costs and improved execution efficiency. The issue of Ethereum transaction fees has always been a major concern for users, especially during peak network times when Gas prices can skyrocket to extremely high levels, affecting the adoption of small transactions and applications like DeFi, NFTs, and blockchain games. The Prague upgrade optimizes Gas calculation methods, improves transaction bundling strategies, and enhances Layer 2 compatibility, providing users with a more stable and predictable transaction cost structure. This not only enhances user experience but also strengthens Ethereum's competitiveness, allowing it to maintain a technological advantage 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 Layer 2 ecosystem has greatly alleviated congestion on the main network, 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 main network, with issues such as data availability, bridge security, and delays in fund inflows and outflows troubling developers and users. The Prague upgrade optimizes these issues, improving the Ethereum mainnet's native support capabilities for Layer 2 solutions, making the second layer network operate more efficiently and securely. This not only helps the development of Rollup solutions but also provides technical support for future modular blockchain architectures.

In the long run, the Prague upgrade is not only a technical 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 trend in the blockchain industry. Markets, developers, investors, and ordinary users are closely watching its final effects and the potential ripple effects it may bring to the Ethereum ecosystem and even the entire crypto industry.

3. Technical and Ecological Impact of the Prague Upgrade

The Prague upgrade is a comprehensive hard fork focused on enhancing the scalability, security, and user experience of the Ethereum ecosystem. In this version, Ethereum makes several technical adjustments aimed at improving on-chain operations, the staking mechanism, and Layer 2 network support, further promoting ecological development. Below are the key EIPs of the Prague upgrade:

3.1 Account Abstraction ( EIP-770 )

CA(, and can directly perform various operations through the EOA account, such as authorization and delegation. This significantly reduces the operational costs for users, making on-chain interactions simpler and smoother.

Key significance:

• Improved User Experience: Simplified operation process, users no longer need to register or manage complex accounts, lowering the entry threshold.
• DApp Impact: For exchanges and other DApps, the batch aggregation feature can reduce management costs and improve efficiency. However, it is important to be aware of security risks, as account abstraction may increase the complexity of permission management.

) 3.2 Staking Mechanism Optimization

The Prague upgrade implements multiple optimizations to the staking mechanism, enhancing the security and flexibility of staking operations, and ensuring network decentralization and security.

EIP-6110: Optimizing Staking Operations, the consensus layer no longer relies on the voting mechanism, 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, reduce the complexity of validator management, and decrease system redundancy.

EIP-7549: Enhancing the flexibility of staking operations, validators can more easily perform partial withdrawals and exits.

These improvements aim to ensure network security and reduce the issue of large-scale validator centralization. They provide more flexibility and compound yield opportunities for users participating in staking, but also bring potential risks to decentralization.

3.3 Layer 2 network supports ### L2 optimization (

With the development of the L2 ecosystem, the Prague upgrade pays special attention to L2 support and optimization.

EIP-7623 & EIP-7691: Enhance L2 storage and throughput capabilities. EIP-7623 reduces L2 network dependence on calldata by increasing calldata gas fees in transactions; EIP-7691 expands L2 Blob capacity, enhancing storage space.

Blob Optimization: Increase the capacity and configuration flexibility of the Blob data structure, enhancing support for L2. Allow more L2 solutions to run on the main chain and improve processing capability.

These measures reflect Ethereum's efforts to build a stronger L2 ecosystem, supporting high-frequency trading and large-scale application demands.

) 3.4 Data Availability and Throughput Improvement

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

3.5 The impact of the Prague upgrade on the Ethereum ecosystem

The Prague upgrade plays an important role in the long-term development of Ethereum. It makes Ethereum more suitable for the L2 era, enhancing the network's scalability, security, and decentralization. With future upgrades like ### such as the Osaka and Amsterdam hard forks, the functions of Ethereum will become richer, driving it towards visions like "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, laying a higher foundation for scalability and decentralization through technological improvements. Through account abstraction, staking mechanism optimization, and L2 support, Ethereum becomes 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.

IV. Challenges and Controversies of the Prague Upgrade

The Prague upgrade, while bringing several technical improvements and optimizations, also faces some challenges and controversies during its implementation. These challenges arise not only from the technical level but also involve balancing the interests of ecological participants and choosing the long-term development direction of Ethereum. The main challenges and controversies include:

( 4.1 The security risks brought by account abstraction

EIP-7702 introduces an account abstraction mechanism that allows users to implement more flexible transaction methods at the chain layer. Account abstraction eliminates the differences between account types, enabling users to conduct transactions directly using EOA. This reduces interaction costs and allows multiple transaction methods to be executed in parallel within a single account. However, this flexibility brings potential security risks. Account abstraction increases the complexity of user permission management; if wallet service providers fail to adapt correctly, it may lead to unexpected security vulnerabilities. Once a vulnerability occurs, it could result in cross-chain losses or even explosive attacks. Hackers may exploit these mechanism vulnerabilities to conduct phishing attacks, especially when wallet service providers are improperly adapted. Therefore, while account abstraction optimizes user experience, its security remains a significant risk in the Prague upgrade.

) 4.2 L2 Ecological Challenges and Scalability Issues

The Prague upgrade emphasizes the optimization of the L2 ecosystem, especially in terms of transaction data storage and computational efficiency. It enhances L2 storage capacity and computing efficiency through EIP-7623 and EIP-7691. However, technically, managing and optimizing L2 transaction costs and liquidity remains a significant challenge. The increase in calldata fees from EIP-7623 may lead to rising costs for some L2 systems. If L2 systems cannot adapt effectively, it may affect long-term sustainability and user experience. While L2 scaling alleviates pressure on the main chain, interoperability issues between L2s plague the entire ecosystem. The biggest challenge facing further expansion and optimization of L2 is coordinating communication, transactions, and data sharing between different L2s. As the number of different L2 solutions increases, cross-chain complexity grows, and fragmented liquidity and security may impact the overall stability and efficiency of the ecosystem. Therefore, while the Prague upgrade makes significant efforts to optimize the L2 ecosystem, the actual effects remain to be seen, especially regarding how L2 can work in coordination with L1, and how to ensure the transparency and verifiability of L2 transactions.

4.3 Community and Developer Adaptability Issues

The Prague upgrade involves multiple EIP proposals, including technical changes that have far-reaching impacts on the ecosystem. Although it can theoretically significantly enhance network performance and user experience, practical application and adaptation may encounter resistance from developers and users. In particular, the introduction of new technologies such as account abstraction and BLS signatures may require developers to restructure and optimize existing DApps, potentially leading to development and adaptation pressure in the short term.

More importantly, core proposals such as EIP-7702 and EIP-2537, have an impact on opening