Ethereum Dencun Upgrade: The Paradigm Shift at a Turning Point and the Real Impact of Proto-Danksharding

The Ethereum ecosystem experienced a turning point in the first quarter of 2024. The Dencun upgrade, one of the most anticipated updates in the blockchain industry, promised to fundamentally transform the network’s transaction capacity and efficiency. Known as the Cancun-Deneb upgrade, this was not just a technical improvement; it reshaped the structure of the Ethereum ecosystem, user experience, and the economic model of Layer-2 networks. With the introduction of Proto-Danksharding technology, a new approach to Ethereum’s scalability challenges emerged.

Proto-Danksharding and Blobs: The Foundation of Ethereum’s Data Storage Revolution

At the core of the Dencun upgrade is the Proto-Danksharding proposal, known as EIP-4844. This innovative technology incorporated a new data structure called “blobs”—large data packets—into the Ethereum network, radically expanding data storage and processing capacity.

The blobs concept allows transaction data to be temporarily stored on the Ethereum network. With a fixed bandwidth of about 1 MB per slot, Layer-2 networks can store transaction data more cheaply. This structural change has especially transformed rollup-based Layer-2 solutions.

Independent data availability (DA) layers such as Celestia, EigenDA, and Avail faced significant pressure. Proto-Danksharding greatly reduced the data storage costs that are the primary promise of DA layers. This forced these projects to review their business models and market positions.

Technical Architecture of Dencun: Beyond EIP-4844

The Dencun upgrade includes numerous technical improvements beyond Proto-Danksharding:

• EIP-1153: Reduces gas costs and increases network efficiency by allowing temporary storage during smart contract execution.

• EIP-4788: Improves operational efficiency by providing direct access to the Beacon Block Root in the consensus layer.

• EIP-5656: Accelerates memory operations by introducing the MCOPY opcode.

• EIP-6780: Enhances network security by restricting the SELFDESTRUCT function in smart contracts.

• EIP-6493: Strengthens blockchain finality by improving validator block selection mechanisms.

The combination of these technologies has enabled Ethereum to undergo a multi-layered performance enhancement. Each EIP addresses specific issues while collectively forming part of Ethereum 2.0’s roadmap.

Real Market Impact of the Dencun Upgrade: Changes Two Years Later

Successfully deployed in March 2024, the Dencun upgrade exceeded most expectations. Two years later (as of February 2026), the market realities are as follows:

Reduction in Gas Fees: While the primary goal was to significantly lower gas fees on Layer-2 networks—by a factor of 10 to 100—actual results showed an average decrease of 40 to 60 times. For example, ETH transfer costs on Arbitrum dropped from $0.24 to $0.004; on Optimism, from $0.47 to $0.007. This indicates the upgrade successfully achieved its main objective.

Increase in Transaction Volume: Mainnet transaction volume, which started at an average of 15 transactions per second (TPS), has risen to over 1000 TPS on Layer-2 networks. Notably, Arbitrum and Optimism tripled their monthly transaction volumes, proving their scalability.

Growth of Layer-2 Networks: Post-Dencun, user bases on Arbitrum, Optimism, and Polygon grew by 300-400%. Cheaper transaction costs enabled many new applications to launch on Layer-2. DeFi platforms, NFT marketplaces, and even gaming projects migrated to Layer-2 solutions.

Upgrade Process: An Accessible Technical Transition

The implementation of the Dencun upgrade followed a methodical process reflecting Ethereum’s technical maturity. Starting with testnets in January 2024—Goerli, then Sepolia and Holesky—the upgrade was tested extensively. Each testing phase provided valuable opportunities to identify and fix issues.

The mainnet deployment in March proceeded smoothly, thanks to lessons learned and increased technical expertise. The successful management of the Merge gave developers confidence to deploy large-scale updates like Dencun securely.

Position in the Ethereum 2.0 Roadmap: From Proto-Danksharding to Full Danksharding

Ethereum 2.0’s roadmap has progressed through several key phases. Launching the Beacon Chain in 2020, transitioning to Proof of Stake with The Merge in 2022, and expanding staking features with the Shanghai/Capella upgrade in 2023 are major milestones.

The Dencun upgrade implemented the practical application of Proto-Danksharding within this roadmap. Seen as a transitional step toward full Danksharding, Dencun demonstrated how Ethereum’s network architecture could be partitioned and how each shard could operate independently.

Subsequently, the upcoming Electra + Prague (Petra) upgrade plans to introduce Verkle Trees, a data structure that will more efficiently store Ethereum’s state data, serving as the final step before full Danksharding.

Real Benefits for Users and Developers

The impact of the Dencun upgrade on user and developer experience has gone beyond expectations:

New Use Cases Enabled: The increased data storage capacity via blobs has allowed developers to build more complex applications. Decentralized databases, large-scale data analytics, and even crypto economy simulations can now run on Layer-2.

Revitalization of Liquid Staking: Higher transaction volumes and lower gas fees have improved the efficiency of liquid staking protocols. Users can earn staking rewards while maintaining liquidity, boosting Ethereum’s economic appeal.

Strengthening the dApp Ecosystem: Cheaper and faster transactions have opened the door for traditional Web2 applications to migrate onto blockchain. Web3 games, social networks, and e-commerce platforms are rapidly expanding on Ethereum Layer-2.

Risks and Challenges: The Shadow Side of the Upgrade

Despite its success, the Dencun upgrade introduced some potential risks:

Technical Complexities and Security Concerns: The blobs system created new attack vectors. Malicious actors attempted exploits related to blobs data, requiring Ethereum to implement additional security measures.

Compatibility Issues: Some older smart contracts and tools faced compatibility problems post-upgrade. Updating developer tools took time and temporarily affected functionality.

Centralization Risks: Increased transaction throughput put more load on node operators, raising costs for running full nodes and potentially leading to partial centralization.

Future Outlook: Full Danksharding and Beyond

While the Dencun upgrade was successful, Ethereum’s scalability journey continues. Full Danksharding could push the network to 10,000 TPS, making Ethereum a truly global, usable platform.

The implementation of Proto-Danksharding in Dencun has made this goal more realistic. The Ethereum community estimates that full Danksharding could be deployed around 2026–2027.

Meanwhile, improvements in Ethereum Layer-1 performance will continue alongside growing pressure on Layer-2 solutions. Networks like Arbitrum and Optimism are expected to further evolve, becoming the main infrastructure for Web3 applications.

Conclusion: Entering Ethereum’s Scalability Era

The Ethereum Dencun upgrade stands as one of the most comprehensive technical responses to scalability issues in the crypto industry. The successful deployment of Proto-Danksharding demonstrated that Ethereum’s theoretical capabilities can translate into practical results.

Two years on, Dencun has surpassed most expectations: gas fees have dropped dramatically, transaction volumes have surged, and Layer-2 networks have become genuinely scalable solutions. Ethereum has evolved into a platform capable of hosting not just financial applications but all kinds of dApps.

This transformation has created significant opportunities for investors and users alike. The growth of the Ethereum ecosystem, the success of Layer-2 solutions, and rapid dApp innovation have introduced new dynamics into the crypto market. The Ethereum Dencun upgrade confirms that blockchain technology has matured and entered its main usage era.