The Ethereum upgrade Dencun is a significant update that is expected to have a direct impact on user experience by significantly reducing gas fees on L2 networks. This will be achieved through the implementation of either EIP-4844 or proto-danksharding. The Dencun upgrade is considered the most substantial upgrade since The Merge, which occurred in September 2022, where Ethereum shifted into a proof-of-stake blockchain.
What is the Ethereum Deneb-Cancun (Dencun) Upgrade?
The Ethereum roadmap is entering “The Surge” era with the Dencun upgrade, a significant update prioritizing scalability. Ethereum co-founder Vitalik Buterin has set a target of “100,000 transactions per second and beyond” for this phase. The upgrade includes nine Ethereum improvement proposals, including proto-danksharding or EIP-4844. This proposal introduces “data blobs,” a temporary storage space for the use of Ethereum’s L2 networks. By increasing data availability capacity on the Ethereum mainnet with additional storage, L2 rollups can effectively lower gas fees for the end-user.
Ethereum Dencun EIPs Explained
The Ethereum protocol development team has explained nine EIPs that will be implemented during the Dencun Ethereum upgrade. Let’s take a closer look at them.
EIP-1153
Two new EVM opcodes, TLOAD and TSTORE, erase themselves at the end of each transaction, making gas fee usage more efficient by not storing them in Ethereum’s global state.
EIP-4788
With this upgrade, it becomes possible to store the block roots of the Ethereum Beacon chain on the execution layer through a smart contract on the EVM.
EIP-4844
The new Proto-danksharding system will utilize temporary data blobs to store transaction data for rollups to access. These blobs will not have any interaction with EVM, will lower gas fees, and will enable Ethereum nodes to stay slim.
EIP-5656
A new EVM copycode called MCOPY has been introduced through EIP-5656, which offers a more affordable and straightforward method for copying memory within the EVM.
EIP-6780
The upcoming EIP-6780 update will change the behaviour of the SELFDESTRUCT opcode, ensuring that a contract can only be deleted if the opcode is called within the same transaction as the contract creation.
EIP-7044
With the addition of EIP-7044, restrictions on the validity of a validator exit message can now be lifted.
EIP-7045
The time frame for including attestations in a Beacon Chain block has been extended with this upgrade.
EIP-7514
There is now a limit on the number of validators that can be activated during each epoch.
EIP-7516
In the latest Ethereum update, a new opcode called BLOBBASEFEE has been introduced. This opcode retrieves the blob base-fee value of the block in which it is executed.
Photo: Ethereum
6 Key Benefits of the Dencun Ethereum Upgrade
In this section, we summarize how the Dencun upgrade will benefit the Ethereum ecosystem.
1. Enhanced Scalability
The upgrade by Dencun is set to boost Ethereum’s network throughput by introducing proto-danksharding, creating temporary storage for L2 rollups and improving the volume of transactions per second.
2. Reduced Gas Fees
Proto-danksharding is a technology that can help reduce gas fees on L2 rollups. As of now, it costs less than $0.90 to swap tokens on optimistic L2 rollups like Optimism and Arbitrum One, compared to over $16 on the Ethereum mainnet. Meanwhile, token swap gas fees on zero-knowledge (ZK) rollups like Polygon zkEVM cost about $1.6.
With proto-danksharding, gas fees on optimistic and ZK rollups will reduce further. This development will enable them to compete with global payment giants like Visa and Mastercard, who are themselves exploring the blockchain and various L2s.
According to estimations, gas fees on a token swap on Base L2 will reduce from a previous cost of about $0.58 to $0.01 after EIP-4844.
3. Enhanced Security
With the Dencun upgrade, EIP-6780 will be implemented, disabling the SELFDESTRUCT code. This update will limit the termination of smart contracts, thereby enhancing the safeguarding of user data and funds.
4. Improved Cross-Chain Communication
With the Dencun upgrade, cross-chain bridges and stake pools will be improved, allowing for easy and safe communication among different blockchain networks.
5. Better Data Storage
EIP-1153 is proposing changes that will optimize data storage on the Ethereum blockchain. The changes include the introduction of new opcodes that won’t be stored in Ethereum’s global state. This will improve block space usage, resulting in more efficient gas fee usage.
6. Setting the Stage for Full Danksharding
The goal of Ethereum for The Surge is to achieve full danksharding, which will enable over 100,000 transactions per second. However, this goal is still several years away as various network upgrades, including proposer-builder separation, need to be implemented first. As a stepping stone during the Dencun upgrade, proto-danksharding will be introduced. According to Ethereum developers, the number of data blobs in proto-danksharding will increase from one per block to 64 in full danksharding.
Max Wadington, a research analyst at Fidelity Digital Assets, has highlighted three important implications of the recent Dencun upgrade on Ethereum.
Firstly, data blobs will only be stored on the Ethereum mainnet for 18 days, improving data availability without congesting Ethereum nodes. Secondly, the upgrade is unlikely to reduce gas fees on the Ethereum mainnet.
Finally, the Dencun upgrade marks a significant shift in Ethereum’s focus, as it now prioritizes servicing other blockchains over serving users directly.
Wrapping Up The Ethereum Upgrade – Dencun
The Dencun upgrade is expected to have a direct impact on most Ethereum users by reducing the gas fees paid on L2s. While there have been other Ethereum upgrades in the interim, such as Shanghai, which allowed users to unstake their staked ETH in April 2023, the Dencun upgrade via proto-danksharding is being hailed as the most significant Ethereum upgrade since The Merge.
