Dencun: How the Ethereum upgrade revolutionizes scalability and reduces network fees

The Ethereum network is entering a new era with the completion of the Dencun upgrade (Cancun-Deneb), a transformative milestone that addresses key scalability and transaction cost challenges. This software upgrade represents a decisive step forward in implementing Proto-Danksharding, fundamentally changing how the Ethereum blockchain processes and stores data.

What changes with the Dencun upgrade on the Ethereum network

The Dencun update introduces (EIP-4844) Proto-Danksharding, a radically different solution for data availability. Instead of relying solely on traditional mainnet storage, the network now uses “blobs” — temporary data structures stored on the Beacon Chain. This fundamental shift allows the Ethereum network to process much larger volumes of transactions without excessive congestion.

The Dencun upgrade is not just an isolated improvement. It integrates multiple Ethereum improvement proposals (EIPs) working together:

• EIP-1153 offers transient memory operations, reducing smart contract operational costs
• EIP-4788 improves communication between execution and consensus layers through Beacon Block Root commits
• EIP-5656 implements the MCOPY opcode for more efficient memory operations
• EIP-6780 restricts the SELFDESTRUCT function, enhancing overall network security

Immediate impact: Cost reduction and transaction acceleration

Investors and users will notice tangible changes shortly after the network completes the Dencun upgrade. Layer 2 solutions built on Ethereum can reduce their gas fees by up to 100 times, transforming applications that were previously economically unviable into profitable operations.

The network’s transaction throughput is projected to scale from approximately 15 transactions per second (TPS) to up to 1,000 TPS — a 66-fold increase in capacity. This means Ethereum can finally handle trading volumes, DeFi transfers, and NFT operations without the bottlenecks that have historically frustrated users.

Beyond speed, storage efficiency improves dramatically. The 1 MB “blobs” per slot provide developers with much more space for innovative applications, from optimized rollups to new token models.

Historical trajectory: Understanding how we got here

The Dencun upgrade does not emerge out of nowhere. It follows a sequence of strategic updates that have shaped Ethereum 2.0:

Beacon Chain (December 2020): Launched as a parallel Proof of Stake blockchain, providing the consensus infrastructure for future innovations.

The Merge (September 2022): Consolidated the mainnet with the Beacon Chain, migrating Ethereum to PoS consensus and reducing energy consumption by 99.5%.

Shanghai/Capella (April 2023): Enabled liquid staking, allowing participants to withdraw rewards and staked tokens without waiting for unstaking periods.

Dencun (2024): Now implements Proto-Danksharding, paving the way for full Danksharding.

Dencun upgrade implementation schedule

The Dencun software upgrade followed rigorous testing phases before activation on the mainnet:

• January 17, 2024: First test on the Goerli Testnet
• January 30: Sepolia Testnet received the update
• February 7: Holesky Testnet completed validation tests

Throughout all phases, the protocol was refined on Devnet, ensuring vulnerabilities were identified and fixed before mainnet deployment.

What Proto-Danksharding (EIP-4844) means for the future

EIP-4844 lays the technical foundations for full Danksharding, which will split Ethereum into multiple independent shards. Each shard will process transactions and smart contracts in parallel, exponentially multiplying network capacity.

Proto-Danksharding acts as a transitional phase, testing the viability of “blobs” in a production environment before committing to full sharding. This is an example of careful engineering — Ethereum advances iteratively rather than making risky jumps.

Market expectations and opportunities for investors

The Dencun upgrade creates multiple opportunities:

For ETH holders: Greater network efficiency means more viable applications and increased utility for Ethereum, potentially boosting demand.

For Layer 2 builders: Architectures like Optimism, Arbitrum, and Polygon gain access to cheap “blobs,” allowing them to reduce fees and attract more users.

For dApp developers: Significant cost economies open new use cases in DeFi, gaming, social, and digital finance.

For traders: Liquidity and volume are expected to increase with cheaper operations, potentially improving trading opportunities.

Technical risks and security considerations

While the Dencun upgrade represents significant progress, some issues remain:

Implementation complexity: Third-party developers may face challenges optimizing contracts for “blobs,” leading to potential transient vulnerabilities.

Backward compatibility: Some legacy applications may need updates to fully benefit from the new system.

Network pressure during transition: Although extensively tested, large-scale behavior of “blobs” in production may reveal unforeseen bottlenecks.

The Ethereum ecosystem has mitigated these risks through prolonged testing, clear stakeholder communication, and careful implementation.

The future: From Proto-Danksharding to Full Danksharding

The Dencun upgrade is a step, not the final destination. Full Danksharding will come in subsequent phases, potentially making Ethereum 100 to 1,000 times more scalable than its current form.

This long-term vision reflects Ethereum’s commitment to continuous improvements. Each step adds capacity, reduces costs, and makes the platform more accessible to billions of potential users.

Conclusion: Ethereum evolves to the next generation

The Dencun upgrade marks a tangible transformation for Ethereum. As the network completes its Dencun software upgrade, it enters a phase of greater efficiency, lower costs, and higher transaction capacity. Investors, traders, and builders should see this as a turning point — the moment Ethereum shifts from an expensive, congested network to a truly scalable and accessible infrastructure for next-generation decentralized applications.