WHAT IS DENCUN UPGRADE AND ITS MEANING TO ETHEREUM NETWORK

The Dencun upgrade is the most awaited Ethereum update, coming in first quarter of 2024, marking the beginning of The Surge era. Over the past two years, the Ethereum network has undergone two major upgrades - The Merge and the Shanghai or Shapella upgrade.

These upgrades have helped Ethereum achieve energy efficiency, open withdrawals of staked ETH, and improve gas fees for developers.

Even though Ethereum's protocol transition has ended, the network still faces scaling issues. This has led to the adoption of a rollup scaling model, where the execution layer is deployed off-chain and verifying process will be executed on-chain. As a result, fees on rollups are 3-8 times cheaper than the original chain but still not cheap enough to compete with other L1s. To reduce L2 fees and enhance Ethereum's scalability, the Cancun-Deneb or Dencun upgrade is being implemented.

In this article, we will learn about the implications of the Dencun upgrade, testnet runtime, and official launch.

What is Dencun Upgrade?

The Dencun upgrade is an Ethereum hardfork upgrade that focuses on solving scalability issues by improving Ethereum as a Data Availability layer through a method known as proto-danksharding. This will allow rollups to upload data to Ethereum at at least 10 times lower cost, significantly reducing gas costs for users.

This upgrade will be implemented in two parts — Deneb and Cancun, through 9 Ethereum improvement proposals (EIPs). The Deneb upgrade makes improvements on the consensus layer, while Cancun makes improvements on the enforcement layer.

In addition to Ethereum's scalability, the Dencun upgrade also improves security, benefits dApp developers, and enhances the staking experience for users. Therefore, this upgrade will lay the foundation for expanding Ethereum's data accessibility and making the rollup architecture more suitable to meet the growing needs of users.

What does the Dencun upgrade improve?

The Ethereum Improvement Proposals (EIPs) in the upcoming Dencun upgrade positively impact various aspects of Ethereum. From introducing efficient opcodes to reducing gas prices on rollups, the Dencun upgrade improves Ethereum at scale. The 4 main improvements from the Dencun upgrade can be presented as follows:

1. Enhance scalability

The most important proposal in the Dencun upgrade is EIP-4844 or proto-danksharding. This particular innovation lays the foundation for network-based scaling by making rollups cheaper to post data to Ethereum.

2. Enhanced security

The Dencun upgrade includes multiple recommendations to enhance security at the user application and consensus layer levels, including EIP-4788, 6780, and 7514

3. Improved staking experience

At the consensus layer, the Deneb upgrade is implementing two proposals to improve staking user experience and block confirmation times, EIP-7044 and EIP-7045

4. Improve cost efficiency

The Cancun upgrade introduces two proposals, EIP-5656 and EIP-1153, to provide new opcodes to support dApp developers, specifically in optimizing gas costs.

The Dencun upgrade was initially scheduled to be deployed by the end of 2023. However, several implementation and consensus issues have delayed implementation to 2024.

We now have specific dates for the public testnets:

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

The Dencun upgrade will mark an important milestone in the development roadmap, transforming Ethereum into a more scalable and efficient blockchain network. The introduction of proto-danksharding paves the way for Ethereum to achieve full scale scaling with rollup, with a target of 100k+ TPS.

Compared to other Ethereum upgrades, the Dencun upgrade has a more drastic transformation at the user application level. As rollups usher in a new level of scalability, there will be many new use cases that require efficient and predictable gas prices.