Ethereum Dencun - A major upgrade is about to change the network

Ethereum is preparing for a groundbreaking step in its journey to become a truly scalable blockchain platform. The Cancun-Deneb (upgrade, commonly known as Dencun), will bring fundamental changes to how Ethereum processes data and transactions. At the core of this upgrade is Proto-Danksharding technology through EIP-4844, a long-awaited enhancement by the crypto community.

What is Dencun and why is it important?

The Ethereum Dencun upgrade is named after the star Deneb in the Cygnus constellation, representing a key milestone in the Ethereum 2.0 roadmap. This is not just a simple technological update but a preparatory step for full Danksharding deployment in the future.

After the Beacon Chain launched in December 2020 and The Merge completed in September 2022 (transitioning to PoS mechanism that reduces energy consumption by 99.5%), Dencun will be the next step addressing scalability—the biggest challenge facing Ethereum today.

EIP-4844: Blob technology changes data storage

EIP-4844 (Proto-Danksharding) introduces the concept of “blobs”—a completely new mechanism for storing data on the blockchain. Instead of storing all transaction data on the Ethereum Mainnet as currently, these blobs will be temporarily stored on the Beacon Chain and then deleted after a certain period.

This offers a significant benefit: greatly reducing storage costs while maintaining data integrity. Layer 2 solutions (such as Arbitrum, Optimism) will be the primary beneficiaries of this technology.

Other technical improvements accompanying Dencun

In addition to EIP-4844, this upgrade includes:

EIP-1153 - Introduces temporary memory during smart contract execution, enabling significant gas savings.

EIP-4788 - Integrates Beacon Block Root information directly into the execution layer, improving interaction efficiency between Ethereum’s consensus and execution layers.

EIP-5656 - Introduces the MCOPY opcode for more efficient memory data copying.

EIP-6780 - Limits the SELFDESTRUCT function, enhancing smart contract security.

Dencun deployment roadmap

Ethereum has begun testing this upgrade since early 2024:

• Goerli testnet: January 17
• Sepolia testnet: January 30
• Holesky testnet: February 7

This testing process is crucial to identify and fix potential issues before mainnet deployment. Originally scheduled for Q4 2023, it was delayed to ensure quality after discussions among Ethereum developers.

Practical benefits for users

###Lower gas fees

This is a direct benefit users will notice immediately. Layer 2 transactions are expected to be 10-100 times cheaper than now. For example, a swap on a Layer 2 DEX could drop from $0.50 to $0.01 or even less.

###Faster transaction speeds

With the Dencun upgrade, Ethereum mainnet throughput could increase from 15 TPS to 1,000 TPS. For Layer 2, these numbers could be even more impressive.

###Opportunities for developers

With increased data storage capacity (fixed data bandwidth at 1 MB per slot), developers will have more space to build complex applications and new features.

###Reviving liquid staking

After the Shanghai upgrade, ETH liquid staking (liquid staking) has grown strongly. Dencun will further facilitate those seeking to earn staking rewards while maintaining liquidity.

Risk considerations

Although Dencun offers many prospects, potential risks should not be overlooked:

• Technical complexity: This upgrade involves fundamental changes to Ethereum’s core. Any bugs could have serious consequences.
• Compatibility: Current smart contracts and applications need testing and updates to function correctly on the new version.
• Transition phase: Temporary disruptions or unforeseen security issues may occur.

Therefore, extensive testing on testnets over several weeks is necessary and prudent.

From Proto-Danksharding to full Danksharding

Dencun is just the first step. Proto-Danksharding only partially addresses scalability issues. The next step will be full Danksharding deployment, which divides the Ethereum network into smaller segments (shards), each processing transactions in parallel.

This will create a leap in scalability—Ethereum could handle thousands of transactions per second, comparable to Layer 2 networks and even surpassing them.

Importance for the ecosystem

The Dencun upgrade attracts significant attention from:

• Layer 2 projects: Arbitrum, Optimism, Polygon will benefit most from reduced costs and increased throughput.
• Investors: Those confident in Ethereum’s future see Dencun as clear evidence of the project’s commitment to solving scalability.
• dApp developers: Building decentralized applications will have better tools and conditions to create top-tier products.

Future outlook for Ethereum

Dencun is not the end but an important milestone in a long journey. After it, full Danksharding will follow, along with other upgrades aimed at optimizing security, decentralization, and other aspects.

As Ethereum continues to evolve through upgrades like Dencun, the crypto community will witness a transformative shift in the blockchain landscape. This platform is gradually transforming from a network with limited throughput into a truly scalable, efficient, and user-friendly network.

For traders and investors, the Dencun Ethereum upgrade opens new opportunities to participate and profit from this increasingly vibrant ecosystem.