## When Will the Dencun Upgrade Arrive? Ethereum Enters a Critical Transformation in Q1 2024

Ethereum is undergoing a profound transformation. Following the September 2022 Merge(Merge) and the April 2023 Shanghai upgrade, the latest Dencun upgrade is set to become the focus in early 2024. What makes this upgrade different? Why is the market so excited? The answer lies in two core innovations: Proto-Danksharding and EIP-4844.

### Proto-Danksharding: Breaking Through Ethereum’s Scalability Bottleneck

To understand the significance of the Dencun upgrade, first grasp what Proto-Danksharding is. This innovation introduces the concept of "blobs"(data blocks), changing how Ethereum stores transaction data. Unlike previous upgrades, the core of Dencun is EIP-4844, which allows transaction data to be temporarily stored on the beacon chain(Beacon Chain) instead of permanently on the mainnet.

This change may seem subtle but has a huge impact. Previously, Ethereum processed about 15 transactions per second(TPS), but after Dencun, it is expected to reach 1000 TPS, meaning network throughput could increase by 50-66 times. For users and developers, the most direct benefit is—transactions become faster, and fees decrease.

### Significant Reduction in Gas Fees: Direct Benefits for Users

What is the most attractive promise of EIP-4844? Lower gas fees. According to technical plans, gas fees on Ethereum Layer 2 solutions could decrease by 10-100 times, and in some scenarios, even drop below $0.001.

Who benefits the most? Users who transact frequently, DeFi participants, and developers. Imagine, transactions that used to cost dozens of dollars might now only cost a few cents. This not only improves user experience but also opens up new possibilities for applications on Ethereum—microtransactions, small payments, complex cross-chain operations—all becoming economically feasible.

### Complete Technical Roadmap of the Dencun Upgrade

In addition to EIP-4844, Dencun includes other important improvements:

**EIP-1153** introduces transient storage mechanisms, enabling efficient data storage during contract execution, further reducing gas consumption.

**EIP-4788** enhances Ethereum’s consensus layer, allowing Layer 2 solutions to directly access beacon chain data, improving overall interoperability and efficiency.

**EIP-5656** introduces the MCOPY opcode, making memory data copying more efficient. While seemingly a technical detail, it significantly helps reduce smart contract execution costs.

**EIP-6780** restricts the SELFDESTRUCT function, enhancing network security and stability by preventing certain attack vectors.

( Timeline for 2024 Upgrade: From Testnets to Mainnet

The Dencun upgrade has a clear schedule:

- **January 17**: Goerli testnet begins upgrade
- **January 30**: Sepolia testnet activates upgrade
- **February 7**: Holesky testnet completes upgrade
- **Mainnet upgrade**: after thorough testing on testnets

This phased approach reflects the Ethereum community’s cautious attitude. Each stage is used to detect potential issues and ensure a smooth mainnet upgrade.

) Why Layer 2 Projects Are Especially Focused on This Upgrade

Layer 2 solutions like Arbitrum, Optimism, and others are more eager than mainnet users for the Dencun upgrade. Why? Because these projects directly benefit from Proto-Danksharding and blob storage improvements.

Layer 2 projects need to store large amounts of transaction data on the mainnet, which is a significant part of their operational costs. EIP-4844 provides a cheaper alternative for data storage, significantly reducing Layer 2 operating costs. These savings will ultimately translate into lower user fees. Industry estimates suggest transaction fees on Layer 2 could drop from a few cents to fractions of a cent or even less.

### Opportunity for Liquidity Staking ETH to Reignite

The Dencun upgrade also has an often-overlooked but important impact: revitalizing liquidity staking ETH.

After the Shanghai upgrade, users could withdraw staking rewards, but the appeal of liquidity staking protocols was limited. The overall performance improvements, fee reductions, and better user experience brought by Dencun are expected to attract more users to participate in staking while maintaining asset liquidity. This is a significant benefit for those seeking to earn yields through staking but also need flexibility with their assets.

### Risks and Challenges of the Upgrade

No major upgrade is without risks. Challenges facing Dencun include:

From a technical perspective, new mechanisms’ complexity might introduce unforeseen vulnerabilities. Although tested on multiple testnets, the complexity of mainnet environments is always hard to fully predict.

From a compatibility standpoint, while Dencun is designed to be relatively backward compatible, some older DApps or contracts might encounter issues during the transition. Historical experience shows that the first few weeks after a major upgrade are often problematic.

Additionally, market reactions post-upgrade are uncertain. Some investors may have already bet on the benefits of the upgrade, but once completed, there could be selling pressure.

### Moving from Proto-Danksharding to Full Danksharding

Dencun is not the end but an important intermediate step. Proto-Danksharding is just the first phase of the full Danksharding design.

The full Danksharding plan involves introducing sharding###shards###, dividing the Ethereum network into multiple independent transaction-processing shards. This architecture can further increase network capacity, potentially achieving 100-1000x scalability improvements. However, this will require time and multiple upgrades to realize gradually.

The Dencun upgrade advances this process, validating the feasibility of blob storage mechanisms and paving the way for future expansion.

( Opportunities for Investors and Developers

What does the Dencun upgrade mean for investors?

First, it confirms Ethereum’s long-term development direction. By actively reducing gas fees and enhancing scalability, Ethereum is fulfilling its promises. For long-term holders, this reinforces confidence in the ecosystem’s growth.

Second, Layer 2 tokens may see valuation increases due to lower costs. Reduced operational expenses mean higher profit margins or lower user fees—both beneficial for project tokens.

For developers, Dencun opens new application possibilities. Previously unfeasible applications due to high costs—such as on-chain gaming, high-frequency trading, micro-payments—are now economically viable. This stimulates innovation.

) Position in the Ethereum 2.0 Roadmap

Reviewing Ethereum’s upgrade history:

- **December 2020**: Beacon Chain###Beacon Chain( launched, introducing PoS consensus
- **September 2022**: Merge)Merge###, Ethereum officially transitions to PoS
- **April 2023**: Shanghai upgrade, enabling staking withdrawal
- **Q1 2024**: Dencun upgrade, introducing Proto-Danksharding

Each step pushes Ethereum toward greater scalability, decentralization, and user-centric development. Dencun is just a key milestone in this longer-term plan.

( Actual Market Significance

From a macro perspective, the Dencun upgrade demonstrates the Ethereum team’s execution capability. In an era of increasing competition among public chains, timely delivery of technical promises is crucial. The progress of Dencun shows that Ethereum not only has grand visions but also actionable implementation.

This sends a positive signal to the entire crypto market: core public chain scalability issues are gradually being addressed, application innovation barriers are lowering, and user experience is improving. These factors could drive the next wave of application prosperity.

) Looking Ahead

The Dencun upgrade in Q1 2024 is not just a technical event but a turning point in Ethereum’s ecosystem development. Through Proto-Danksharding and related improvements, Ethereum is tackling its biggest bottleneck—scalability.

As the upgrade progresses, we may see: a significant increase in Layer 2 applications, emergence of new use cases, substantial reduction in user costs, and overall ecosystem activity growth.

Whether you are a trader, developer, or long-term holder, the Dencun upgrade is worth watching. It marks Ethereum’s entry into a new phase of development—from solving consensus issues(Merge), enabling financial functionalities###Shanghai###, to now addressing scalability(Dencun). The story of Ethereum will continue to unfold in the next decade from here.