What Is the Ethereum Dencun Upgrade, and Why Is It Important?

The Ethereum Dencun upgrade goes live in less than 24 hours.

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  • The Ethereum Dencun upgrade is slated to go live in less than 24 hours.
  • The upgrade combines nine changes wrapped in Ethereum Improvement Proposals (EIPs).
  • The most important feature of the Ethereum Dencun upgrade promises to benefit Layer 2 chains and DeFi.

Nearly a year after Shapella, the Ethereum network is on the brink of another landmark upgrade: the Dencun upgrade.

Following months of development and successful forks on Ethereum’s testnets, at the end of February 2024, developers disclosed that the Dencun upgrade, which promises to dramatically lower fees on Layer 2 chains, would go live on the mainnet at 13:55 UTC on March 13.

With less than 24 hours to go before the long-anticipated upgrade, DailyCoin explains what it is and why, beyond lowering Layer 2 fees, it marks a significant milestone in Ethereum’s scaling vision.

What is Ethereum Dencun?

Like Shapella, Dencun is a portmanteau word for two separate upgrades. These upgrades, Deneb and Cancun, represent changes to Ethereum’s consensus and execution layer, respectively.

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These changes are wrapped up in nine Ethereum Improvement Proposals (EIPs). For the Dencun upgrade, the most important EIP is EIP-4844, also known as proto-danksharding, a change that marks a significant milestone in Ethereum’s scaling roadmap.

Why Proto-Danksharding is a Big Deal

Nearly a decade after Ethereum launched, scalability remains a pressing concern for the network. Among the multiple solutions developers have tipped to address the issue, many have hailed sharding as the ultimate fix.

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The concept involves splitting the Ethereum network into smaller units operating as independent blockchains secured by a rotating set of validators. The resulting parallel processing capability allows multiple transactions to be processed simultaneously, significantly bolstering the network’s overall throughput. 

Despite the promise of the solution, sharding requires multiple complex upgrades, all of which can be dangerous if performed simultaneously. This is where proto-danksharding comes into play.

According to developers, proto-danksharding provides the groundwork for full sharding, introducing most of the changes needed for sharding without sharding the network. Besides marking a significant first step in Ethereum’s sharding vision, proto-danksharding is celebrated for the immediate impact it promises to have on Layer 2 chains.

A Boon for Layer 2 Chains and DeFi

Binary large objects or blobs are at the core of the changes brought on by proto-danksharding. These blobs are inexpensive and temporary memory carrying data about a batch of transactions, typically from Ethereum Layer 2 chains like Optimism and Polygon zkEVM. They are designed to make the verification of the attached transactions more efficient.

Instead of verifying each block, the network will only need to confirm that the data in the attached blob is accurate, significantly bolstering the speed of Layer 2 transaction processing. At the same time, the temporary nature of blobs ensures that these rollups spend less to keep data on Ethereum, bolstering the network’s data availability.

Developers claim that for users, blobs would translate into dramatic two to ten-times reductions in transaction costs on Layer 2 chains.

For builders, developers assert that the lower fees will unlock more novel use cases in sectors like trading, payments, and gaming.

On the Flipside

  • Developers maintain that the full sharding vision is still years away.
  • Ethereum Layer 2 chains must still conduct separate upgrades to benefit from the imminent Dencun upgrade.

Why This Matters

The Dencun upgrade is Ethereum’s biggest upgrade since Shapella, which unlocked staked ETH withdrawals. As the upgrade nears, users must understand what it entails and why it is important.

Read this for more on preparations ahead of the Ethereum Dencun upgrade:

Ethereum Dencun Prep Heats up as Devs Call for Node Upgrades

Learn more about JPMorgan CEO Jamie Dimon’s recent statements on Bitcoin:

Dimon Vows Against Bitcoin, but ‘Will Defend Right to Buy’

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.