A new Ethereum Improvement Proposal (EIP), EIP-7781, introduced on October 5 by Illyriad Games co-founder Ben Adams, could significantly boost Ethereum’s transaction throughput by reducing the network’s slot time from 12 seconds to 9 seconds. The proposed change is aimed at increasing transaction throughput by approximately 33%.

The motivation behind the proposal is to better distribute bandwidth usage over time, thereby lowering peak bandwidth requirements. By smoothing out bandwidth needs, Ethereum could maintain greater efficiency and reduce stress on node operators, particularly those with limited bandwidth capacity. According to Adams, this adjustment is designed to enhance throughput without compromising the accessibility of the network.

Is The Ethereum Improvement Proposal Feasible?

In his official proposal on GitHub, Adams explained, “Reducing Ethereum’s slot time from 12 seconds to 9 seconds can reduce rollup latency and increase transaction throughput by approximately 33% without increasing individual block or blob counts. This would distribute bandwidth usage over time, lowering peak bandwidth requirements while maintaining network efficiency.”

The implementation of EIP-7781 is contingent on two other EIPs—EIP-7623 and EIP-7778. These proposals are crucial to ensuring the stability of the network under the increased block production rate. They are designed to mitigate any potential negative effects of the slot time reduction, such as increased orphan rates or network instability.

EIP-7781 aims to create a balance between throughput and network accessibility by maintaining node efficiency without overburdening the system. This is particularly important for maintaining Ethereum’s decentralized ethos, ensuring that even participants with less sophisticated infrastructure can continue to run nodes.

Prominent Ethereum Foundation researcher Justin Drake weighed in on the proposal, expressing cautious support. In a comment, Drake stated, “My initial reaction would be to support reducing slot times to 8 seconds for a few reasons: It increases throughput by 1/2, an effective increase to a 45M gas limit and 9 blob limit. This roughly aligns with the proposed 40M gas limit by pumpthegas.org and the 8 blob limit by Vitalik and others.”

Drake also noted the benefits for decentralized exchanges (DEXs), stating that the change would make DEXs like Uniswap v3 “roughly 1.22x more efficient,” potentially saving approximately $100 million in centralized exchange (CEX)-DEX arbitrage annually.

However, Drake also mentioned a possible drawback: “One downside of reducing slot times is that it will make timing games slightly more acute because of the slot-to-ping ratio decrease. Assuming an 80ms ping time and a 9s slot time, the slot-to-ping ratio would still be healthy.”

Adam Cochran, a partner at CEHV, expressed his support but added a note of caution, especially for smaller stakers. He wrote on X, “Honestly this seems reasonable in terms of bandwidth on solo stakers too as long as the gas limit per block stays the same. Would want to see some tests on I/O hardware and staker return ping times to make sure it doesn’t cut off some home stakers, but seems like it should be within range for most.”

However, not all voices in the community are fully optimistic. Pseudonymous researcher 0xSmit raised concerns regarding existing smart contracts that rely on a 12-second block time. According to him, “Lots of contracts have hard-coded the value of a year in blocks based on 12-second block times. It might break things if this passes, especially for contracts without upgrade mechanisms.”

At press time, ETH traded at $2,463.

Featured image created with DALL.E, chart from TradingView.com

The crypto market recently suffered a significant downturn due to the escalating geopolitical tensions in the Middle East, with several large-cap assets shedding their recently-accrued gains over the past week. Specifically, the price of Ethereum crashed from above $2,600 to as low as $2,300 at some point during the week.

This represents a fresh setback for the “king of altcoins,” which has not had a particularly positive performance in the past few months. Interestingly, a popular crypto pundit on X has come forward with an on-chain observation into the behavior of Ethereum investors over the last quarter.

How Ethereum Whales Shaving Off Their Holdings Will Impact Price

In a recent post on the social media platform X, crypto analyst Ali Martinez revealed that a particular group of Ethereum whales has been shaving their holdings over the past few months. This on-chain revelation is based on the Mega-Whale Address Count, which tracks the number of addresses holding more than 10,000 units of a particular cryptocurrency.

Whales refer to entities (individuals and organizations) that own significant amounts of a specific cryptocurrency (Ether, in this case). Investors usually pay extra attention to whale movements, as these large entities tend to wield notable influence on market liquidity and prices due to their substantial holdings. 

Source: Ali_charts/X

According to Martinez, the number of whale addresses holding over 10,000 ETH has fallen by more than 7% since July 2024. This decline in the population of large Ethereum holders points to some redistribution or profit-taking and suggests a notable shift in market sentiment, especially among large-scale investors and institutional players.

Interestingly, this reduction in whale addresses coincided with a period where the Ethereum price struggled. Despite the approval and launch of spot ETH exchange-traded funds (ETFs), the altcoin’s price fell from above $3,500 in July to as low as $2,200 by August.

As already seen in the token’s price action over the last few months, the decrease in large Ethereum holders could diminish buying pressure on a grand scale, leading to sluggish price movement. Moreover, sustained profit-taking activities by these whales could potentiate downward pressure on the ETH price.

ETH Price At A Glance

As of this writing, the price of Ethereum sits just above the 2,400 mark, reflecting an insignificant 0.1% decrease in the past 24 hours. The cryptocurrency’s performance on the weekly timeframe is not so insignificant, as the ETH price is down by nearly 10% in the past seven days.

The price of ETH rebounds from $2,300 on the daily timeframe | Source: ETHUSDT chart on TradingView

Featured image from Unsplash, chart from TradingView