Ethereum welcomes the Dencun upgrade: How Proto-Danksharding is reshaping blockchain scalability

Q1 2024, the Ethereum network is about to undergo a significant technological transformation. The Dencun upgrade (also known as the Cancun-Deneb upgrade) represents the most groundbreaking step on the Ethereum 2.0 roadmap from the beacon chain to the merge. How will the core innovation of this upgrade—EIP-4844 proposal introducing Proto-Danksharding—change the user transaction experience? Let’s take a deep dive into this upcoming technological revolution.

Timeline Confirmed: When Will the Dencun Upgrade Launch?

According to official announcements, testing of the Ethereum Dencun upgrade has officially begun. The upgrade will be validated in phases across multiple testnets:

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

As of writing, the Ethereum development team is conducting intensive tests of Proto-danksharding on Devnet 12. The upgrade, originally scheduled for Q4 2023, was delayed due to discussions at the November core developer consensus meeting, and is now confirmed to launch in 2024.

Key Milestones in Ethereum Development

To understand the significance of the Dencun upgrade, it’s essential to review the development history of Ethereum 2.0.

Beacon Chain Launch (December 2020) was Ethereum 2.0’s first step, introducing a separate proof-of-stake blockchain architecture, laying the foundation for subsequent upgrades.

The Merge (September 2022) marked a milestone in Ethereum history. This upgrade fully integrated the mainnet with the beacon chain, transitioning from proof-of-work to proof-of-stake, reducing Ethereum’s energy consumption by over 99.5%.

Shanghai/Capella Upgrade (April 2023) enabled stakers to withdraw ETH rewards, further incentivizing network participation and improving platform accessibility.

Now, the launch of the Dencun upgrade signifies a major breakthrough in Ethereum’s scalability.

EIP-4844: The Core Mechanism of Proto-Danksharding

The heart of the Dencun upgrade is the EIP-4844 proposal, also known as Proto-Danksharding. This innovation introduces a new type of transaction that can handle so-called “blobs”—data temporarily stored on the beacon chain.

This approach changes Ethereum’s traditional data storage logic. “Blobs” are retained on the beacon chain only for short-term storage, not permanently recorded in blocks. Each slot can handle approximately 1 MB of fixed data bandwidth, providing low-cost and efficient data availability for Layer 2 solutions.

Proto-Danksharding represents a transitional phase toward full Danksharding. In the future, Ethereum will further shard, allowing multiple shards to process transactions in parallel, ultimately achieving true large-scale scalability.

Other Key Improvements Covered by the Dencun Upgrade

In addition to EIP-4844, this upgrade includes several important proposals:

EIP-1153 introduces transient storage operation codes, allowing smart contracts to temporarily store data during execution, potentially significantly reducing network fees and improving scalability.

EIP-4788 enhances the execution layer by introducing beacon block roots, enabling developers to directly access beacon chain information and improve operational efficiency.

EIP-5656 introduces MCOPY code operations, greatly improving the efficiency of copying data within smart contracts’ memory.

EIP-6780 restricts the SELFDESTRUCT function in smart contracts, enhancing network security and stability.

Practical Changes Brought by the Upgrade

Costs Significantly Reduced

The most immediate benefit of the Dencun upgrade is a sharp reduction in transaction costs. EIP-4844 aims to lower Ethereum network fees to below $0.001. More notably, Layer 2 network fees are expected to decrease by 10 to 100 times, making micro-payments and high-frequency trading feasible.

Throughput Leap

Before the upgrade, Ethereum’s transaction throughput was about 15 transactions per second (TPS). After Dencun, this figure is expected to soar to around 1,000 TPS. This 100-fold performance boost means the network can support more complex decentralized applications and higher concurrency user demands.

Overall scalability improvements are projected to reach 100 to 1,000 times, fundamentally transforming Ethereum’s capacity.

Opportunities for Developers and Users

For users, faster transaction speeds and lower fees translate into a better experience. For developers, enhanced data storage capabilities and a more powerful execution environment open new possibilities for building complex dApps.

Revival of Liquidity Staking

The Dencun upgrade will also revitalize the ETH liquidity staking market. Users will be able to participate in staking activities and earn rewards while maintaining ETH liquidity. This makes Ethereum a more attractive and versatile blockchain platform.

Risks and Challenges of the Upgrade

Despite the promising outlook, the Dencun upgrade carries risks. The technical complexity could lead to vulnerabilities or network instability, especially during early stages. Transitioning to the new system may pose compatibility challenges for existing smart contracts and decentralized applications, potentially causing temporary disruptions.

Additionally, users and developers need to fully understand these changes and prepare for potential risks.

Full Danksharding: The Next Chapter

The successful implementation of the Dencun upgrade will pave the way for full Danksharding. This ultimate goal involves introducing sharding technology, dividing the Ethereum network into multiple independent shards, each capable of processing transactions and smart contracts in parallel.

Full Danksharding will fundamentally solve network congestion issues, further reduce transaction fees, and make Ethereum a more efficient and user-friendly blockchain ecosystem.

Significance for Investors and Projects

The launch of the Dencun upgrade has attracted widespread attention from investors and Layer-2 projects. This upgrade marks a major advancement in Ethereum’s scalability and performance, seen as a key development for the ecosystem.

It is expected to unlock new possibilities within the Ethereum ecosystem, especially for projects and participants aiming to leverage the enhanced features. Proto-Danksharding technically secures this progress and lays a solid foundation for the full implementation of Danksharding.

Outlook: Ethereum’s Continuous Evolution

The Dencun upgrade represents another important milestone on the Ethereum 2.0 roadmap. As the community anticipates this technological transformation, excitement about its potential continues to grow, particularly with the introduction of Proto-Danksharding.

Every upgrade—from the beacon chain to the merge, the Shanghai upgrade, and now the upcoming Dencun—embodies Ethereum’s steadfast commitment to continuous improvement and innovation. Through these developments, Ethereum is gradually evolving into a more scalable, efficient, and user-centric blockchain platform.

As the Dencun upgrade unfolds, the crypto market will witness new opportunities. Traders and investors will have the chance to participate in the growth of the Ethereum ecosystem and benefit from significant platform performance improvements.