– Ethereum has gone through many changes since its launch in 2015, with the Dencun upgrade implemented on March 13, 2024 being one of the biggest changes.
– The Dencun upgrade includes nine improvements designed to enhance network scalability, lower transaction fees, and enhance security.
– The upgrade introduces proto-danksharding to Ethereum, which reduces gas costs by allowing the network to process layer 2 (L2) transaction data more efficiently.
– Proto-danksharding is made possible by a new type of data called Blob, which is removed from the blockchain instead of being stored forever.
Launched in 2015, Ethereum is a blockchain and decentralized open source software platform. It was created to address some of Bitcoin’s perceived technical limitations when it comes to processing complex financial transactions. Today, Ether (ETH), Ethereum’s native crypto token, is the most valuable cryptocurrency on the market, along with Bitcoin.
Ethereum has become a hub for innovation, attracting developers eager to take advantage of the technologies made possible by blockchain. Blockchain has become home to a variety of decentralized smart contract-based applications (dApps). Decentralized Finance (DeFi) ecosystem. DeFi has ushered in a blockchain-based economic revolution, allowing users to access banking services, secure loans and mortgages, and more without the need for a traditional financial institution.
As Ethereum network traffic increased, scalability became an issue as it was difficult to keep up with the influx of new users. This resulted in slow transaction speeds and the fees users pay to execute transactions. gas billIt has risen steadily. layer 2 network (or L2 network) was built on top of the Ethereum blockchain to help alleviate network congestion by removing much of the transaction activity from the main chain. However, the way L2 had to resolve transactions on the main chain and the way the resulting data was stored was expensive and inefficient.
On March 13, 2024, the blockchain went through a series of nine Ethereum Improvement Proposals (EIPs) called the Dencun Upgrade. that much hard fork It is intended to improve the scalability and efficiency of the network while also reducing transaction fees across the L2 network, passing the savings on to end users.
The Dencun upgrade (derived from a portmanteau of the project names Deneb and Cancun) is “considered the most important event in Ethereum history.absorption” September 2022. During The Merge, Ethereum transitioned from a computationally intensive proof-of-work consensus mechanism for transaction verification. proof of stakeRequires much less energy consumption.
In the coming days, we will take a closer look at the fundamentals of the Dencun upgrade and what it means for users, payments, and the future of Ethereum.
Understanding Dencun Upgrades
The Dencun upgrade includes nine individual EIPs, but the most important component is EIP-4844, which introduces proto-danksharding to Ethereum. Proto-danksharding reduces gas fees by allowing the network to process higher volumes of transactions over the L2 network without compromising reliability or speed. It achieves this by creating an entirely new type of temporary data called a “blob” that is removed from the chain after a certain period of time.
scalability
Ethereum’s future growth depends on its ability to complete more transactions faster and at lower cost. Dencun will allow Ethereum to process data on the L2 network more efficiently, and the resulting gas fee savings are intended to attract more developers to the platform.
gas bill
Blobs allow for more efficient movement of L2 data onto the main chain, where the data is discarded after a certain period of time. Previously, this data was stored permanently on Ethereum, and storage costs accounted for more than 90% of the fees incurred by L2 Rollup users. Ethereum Foundation. Gas rates dropped just a week after the Dencun update went live. over 90 Across the L2 network that integrates it.
security
Among the EIPs included in the Dencun upgrade, EIP-4788 and EIP-6780 are intended to enhance network security. The former can improve communication between Ethereum’s consensus (validation) and execution (processing) layers, making it more difficult for attackers to exploit weaknesses in both layers. EIP-6780 introduces changes to the following: smart contract‘The self-destruct mechanism aims to make it less vulnerable to malicious actors.
Cross-chain communication
The Dencun upgrade’s EIP-4788 also improves cross-chain communications, enabling smoother and more secure interactions between the main Ethereum blockchain and L2 solutions.
data storage
A type of L2 network called rollup reduces traffic on the main chain by bundling off-chain transactions and then moving them to Ethereum for batch processing. Before Dencun, network nodes held Ethereum’s L2 data forever, passing the cost of ever-increasing storage requirements onto end users.
Switch to full danksharding
Proto-danksharding is a stepping stone for Ethereum to make the leap to full danksharding, a key goal of the post-merge phase called “The Surge.” The Surge is about scaling Ethereum exponentially as it strives for mass adoption, and danksharding will play a key role.
Dencun’s impact on payments
The Dencun upgrade should have an overall positive impact on cryptocurrency consumers, enabling cheaper and faster payments on L2 networks. There will be no negative impact for BitPay users and no action will be required from customers or merchants. Many of the other EIPs included in the upgrade do not directly impact end users.
Another important thing to note is that the gas fee reduction that Dencun unlocks only affects real L2 networks such as Optimism, Arbitrum, and Base. polygonBecause it uses its own blockchain, it is not a true L2 solution and is unlikely to provide any fee savings.
What’s next for Ethereum?
Now, with the release of the Dencun upgrade, significant limitations related to fees and data storage that have historically delayed mass adoption of Ethereum no longer exist. Hopes are high that essentially eliminating gas costs will lead to a large number of developers flocking to the platform, no longer discouraged by the shortcomings of Dencun before. This could spark a new wave of innovation on Ethereum that was previously impossible. Full danksharding of Ethereum will likely take several years. However, the Dencun upgrade brings Ethereum one step closer to founder Vitalik Buterin’s ultimate goal of 100,000 transactions per second on the network.