Dencun Upgrade and Proto-Danksharding: Key Developments for Ethereum in 2024

As the leading platform for smart contracts and decentralized applications (dApps), Ethereum is at a critical technological crossroads. The upcoming Cancun-Deneb (Dencun) upgrade represents another major leap forward in the network’s scalability and operational efficiency. At the core of this upgrade—driven by the EIP-4844 standard and the Proto-Danksharding technology—is attracting widespread attention across the crypto ecosystem. Why is this innovation so highly anticipated? How will it reshape Ethereum’s future? This article will delve into the implications, technical details, and far-reaching impacts of this upgrade.

The Essence and Goals of the Cancun-Deneb Upgrade

The Dencun upgrade (full name Cancun-Deneb) marks an important milestone in Ethereum 2.0’s roadmap. The name derives from the bright star Beta Ceti in the constellation Cetus, symbolizing Ethereum’s strategic commitment to enhancing scalability, security, and overall network efficiency.

The upgrade consists of two complementary parts: Cancun focuses on innovations in the data availability layer, while Deneb targets improvements in the blockchain consensus layer. Together, they form a comprehensive network optimization plan.

The Breakthrough Significance of Proto-Danksharding: An In-Depth Look at EIP-4844

EIP-4844 introduces Proto-Danksharding, a revolutionary technology into the Ethereum ecosystem. Its core innovation is the introduction of “blobs”—a new data structure capable of significantly expanding network storage and processing capacity.

Proto-Danksharding serves as a transitional phase toward full Danksharding, representing a qualitative leap for Ethereum. It not only enhances network scalability but also lays the foundation for future architectural evolution.

Notably, the Cancun upgrade also incorporates the State Expiry mechanism. This feature automatically cleans up outdated and redundant data, effectively alleviating network pressure and improving overall operational efficiency.

Proto-Danksharding is expected to have a significant impact on emerging data availability service layers such as Celestia, EigenDA, and Avail. These DA layers provide scalable data storage infrastructure for Ethereum and its Layer-2 scaling solutions. With the implementation of Proto-Danksharding, the costs of accessing and storing DA services will drop substantially, making these networks more economically viable.

Other Key Technical Proposals in the Dencun Upgrade

In addition to Proto-Danksharding, this upgrade includes several important EIP improvements:

EIP-1153 introduces temporary storage operation codes, enabling smart contracts to handle data more efficiently. This directly reduces Gas costs and enhances the network’s overall scalability.

EIP-4788 makes innovations at the consensus layer through the Beacon Block Root mechanism, ensuring real-time access to the latest consensus layer information, thereby improving operational efficiency.

EIP-5656 adds the MCOPY operation code, optimizing memory data copying during smart contract execution.

EIP-6493 fine-tunes the validator block selection mechanism, improving finality processes and effectively reducing mining centralization risks.

EIP-6780 restricts the SELFDESTRUCT function within smart contracts, strengthening network security and stability.

Implementation Timeline

The deployment of the Dencun upgrade is scheduled as follows:

• January 17, 2024: Activation on the Goerli testnet
• January 30, 2024: Activation on the Sepolia testnet
• February 7, 2024: Activation on the Holesky testnet
• March 13, 2024: Mainnet official launch

It is worth noting that the originally planned Q4 2023 release was delayed due to in-depth discussions and assessments during the Ethereum core developer consensus meeting held in November 2023.

Multi-Dimensional Impact on Network Performance

The value of the Dencun upgrade is reflected in several key network performance indicators:

A qualitative leap in scalability—Proto-Danksharding and blob mechanisms will significantly increase transaction processing speed and throughput.

Fundamental reform of Gas fees—The core goal of EIP-4844 is to drastically reduce Gas fees for Layer-2 networks, potentially by 10 to 100 times. This cost structure change is highly significant for all ecosystem participants.

Expansion of network throughput—Through more sophisticated transaction processing mechanisms and increased network capacity, Ethereum will be able to handle larger transaction volumes simultaneously, naturally alleviating network congestion and further reducing Gas consumption.

Enhanced security protections—Proposals like EIP-6780 introduce advanced cryptographic techniques and fortified security protocols, significantly boosting the network’s resistance to attacks.

Optimization of data storage capacity—Through sharding technology, Ethereum will be able to partition the network into multiple independently operating segments, greatly increasing data capacity and improving overall blockchain performance.

The Impact of the Dencun Upgrade on Layer-2 Ecosystems

Layer-2 scaling solutions process transactions off the main chain and settle on Ethereum’s mainnet afterward, enabling scalability. According to Fidelity data, Layer-2 currently accounts for about 10% of total Layer-1 fees, and this ratio is expected to decrease significantly after the upgrade.

Prior to the upgrade, L2 fees data shows that the average costs to transfer ETH to Arbitrum, Optimism, and Polygon are $0.24, $0.47, and $0.78 respectively, while token swap costs are $0.67, $0.92, and $2.85. Post-upgrade, these costs are expected to drop sharply.

The mechanisms by which the Dencun upgrade affects Layer-2 networks include:

Optimized cross-layer interactions—The upgrade is expected to introduce a series of improvements that make interactions between Layer-2 solutions and the Ethereum mainnet more seamless. This means cross-layer transactions will become cheaper and more efficient, reducing overall costs for the Layer-2 ecosystem.

Enhanced throughput of the base layer—As the mainnet becomes more efficient, Layer-2 will benefit as well. Faster mainnet transaction processing will allow Layer-2 to confirm transactions more quickly on-chain and reduce related costs. This chain reaction will ultimately manifest as lower Layer-2 fees.

Unified security standards—The Dencun upgrade may introduce new security protocols that will gradually be adopted by Layer-2 networks. While not directly related to Gas fees, stronger security guarantees will create a more stable and reliable network environment. Stable network operation and smoother transaction processing indirectly contribute to lower Gas costs and reduce the risk of fee spikes caused by network failures.

Deep Impact on Users and Developers

As a key part of the Ethereum 2.0 roadmap, the Cancun-Deneb upgrade will significantly enhance blockchain scalability. Industry expectations are that this upgrade could increase Ethereum’s scalability by 100 to 1000 times and potentially lower Gas fees to below $0.001.

This upgrade will bring the following key changes to ecosystem participants:

Revolutionary improvements in transaction throughput and responsiveness—After the Cancun-Deneb upgrade, Ethereum’s transaction capacity could rise from approximately 15 TPS to an astonishing 1000 TPS. Users will enjoy ultra-fast transaction confirmation thanks to Proto-Danksharding, and the ETH staking security mechanism will provide stronger protection for transactions.

Robust development of the decentralized application ecosystem—This performance leap will enable the network to reliably handle massive transaction volumes and support complex smart contracts and dApps. Developers will benefit from a more stable and reliable environment, creating favorable conditions for building advanced decentralized applications.

Unlimited possibilities for innovative use cases—Optimizations in transaction efficiency and system compatibility introduced by the Dencun upgrade open doors for future innovations in the Ethereum ecosystem. The “data block” feature, providing a fixed 1MB/slot data transfer capacity, allows developers to handle larger datasets, laying a solid foundation for new application architectures and usage models.

Revitalizing the liquid staking ecosystem—The upgrade is expected to inject new momentum into ETH liquid staking. Users will have opportunities to earn yields through staking while maintaining asset liquidity. This flexible participation mechanism will further enhance Ethereum’s appeal and multifunctionality as a blockchain platform.

The Complete Evolutionary Roadmap of Ethereum

Ethereum 2.0 signifies a fundamental shift toward higher scalability, stronger security, and better operational efficiency.

Phase 1: Foundation of the Beacon Chain—Launched on December 1, 2020, the Beacon Chain exists as an independent PoS blockchain running parallel to the Ethereum mainnet, laying the groundwork for network security and future upgrades.

Turning point: The Merge completion—On September 15, 2022, The Merge merged the Ethereum mainnet with the Beacon Chain, switching the network to PoS consensus. This change reduced Ethereum’s energy consumption by over 99.5%, marking a milestone.

Progress: Shanghai/Capella upgrade—Completed in April 2023, this upgrade enabled users to withdraw staked ETH and rewards, significantly increasing network participation and incentivizing more staking activity.

Current stage: The launch of Dencun—Marked by March 13, 2024, Ethereum enters the era of the Cancun upgrade. The deployment of Proto-Danksharding signifies a leap forward in scalability and operational efficiency.

Looking ahead: Petra upgrade prospects—Post-Dencun, the Ethereum community is focusing on the next phase upgrade codenamed Electra + Prague (Petra). The introduction of Verkle Tree data structures promises to further strengthen data processing and storage capabilities, continuing along the scalability path.

Ultimate goal: Full implementation of Danksharding—Proto-Danksharding is a transitional phase toward full Danksharding, which will represent the final form of Ethereum’s scalability evolution. The new transaction types and extension mechanisms defined in EIP-4844 pave the way for this ultimate goal.

Potential Risks and Challenges During the Upgrade

Despite the promising outlook, deploying the Dencun upgrade involves risks that need attention:

Technical implementation uncertainties—Large-scale upgrades involve complex code modifications, and any subtle bugs could lead to vulnerabilities or instability.

Ecosystem compatibility issues—Migration to the new system may cause friction with existing smart contracts and dApps. During the transition, short-term failures or security risks could occur, requiring developers and users to prepare in advance.

Uncertainty in Gas fee changes—Initially, as the network adapts to new mechanisms, Gas fees may fluctuate. The final cost changes will depend on how developers and users accept and utilize new features. Participants should stay informed about upgrade developments and adjust strategies accordingly to maximize interaction efficiency with Ethereum and Layer-2 ecosystems.

Danksharding: The Next Frontier After Dencun

Following the successful completion of the Dencun upgrade, the Ethereum ecosystem has shifted focus to the next milestone—full Danksharding deployment. This breakthrough aims to fundamentally reshape Ethereum through sharding architecture.

Danksharding will partition the Ethereum network into multiple independent shards, each capable of processing transactions and smart contracts autonomously. This strategic network segmentation aims to alleviate transaction congestion, reduce costs, and create a more attractive platform for users and developers.

The evolution from Proto-Danksharding (defined by EIP-4844) to Danksharding represents a clear technical progression. The Proto stage lays the groundwork for the final implementation of Danksharding, which is expected to significantly improve Ethereum’s scalability and usability—an important development for the community committed to enhancing platform efficiency.

Outlook: The Future of Ethereum 2.0

The Cancun-Deneb upgrade is a pivotal milestone in Ethereum’s development, marking a step toward a more efficient, scalable blockchain. The community is highly optimistic about the transformative potential embedded in this upgrade, especially the profound improvements brought by Proto-Danksharding.

From Proto-Danksharding to the eventual deployment of Danksharding, this evolutionary path reflects Ethereum’s unwavering commitment to continuous improvement and innovation. With each upgrade—whether Cancun-Deneb or subsequent Danksharding—the network is steadily progressing toward a more scalable, efficient, and user-centric blockchain platform.

As Ethereum advances through the Dencun upgrade, the crypto market will witness profound changes. This technological evolution not only opens new interaction opportunities for traders and investors within the Ethereum ecosystem but also creates new benefits from the platform upgrade wave.