Ethereum Dencum Upgrade Arrives: How EIP-4844 Changes Transaction Costs

Q1 2024, Ethereum will undergo a major upgrade—Cancun-Deneb (Dencum). The core highlight of this upgrade is the EIP-4844 proposal introducing Proto-Danksharding technology, which directly impacts your transaction fees and network experience.

Core Innovation of the Upgrade: What is Proto-Danksharding

Simply put, Proto-Danksharding introduces a new data handling method—“blobs.” These data chunks are temporarily stored on the beacon chain and then automatically deleted, unlike previous permanent storage on the blockchain.

What are the benefits? Directly reducing storage costs. Ethereum Layer-2 solutions benefit greatly because they rely heavily on on-chain data. EIP-4844, by optimizing this process, is expected to reduce Layer-2 transaction fees by 10-100 times.

EIP-4844 Timeline: Upgrade Schedule Announced

Officially announced Dencum upgrade test progress:

• Goerli Testnet: Launching on January 17, 2024
• Sepolia Testnet: Going live on January 30
• Holesky Testnet: Deployment on February 7
• Mainnet Launch: Expected to be completed in Q1 2024

Proto-Danksharding has already been tested on Devnet 12, with preparations for the upgrade well underway.

Other Key Improvements in the Cancun Upgrade

In addition to EIP-4844, this upgrade includes:

EIP-1153 - Instant Storage: Allows smart contracts to temporarily store data, significantly reducing gas costs.

EIP-4788 - Beacon Block Roots: Enhances smart contracts’ ability to directly access staking layer data, improving interaction efficiency.

EIP-5656 - MCOPY Opcode: Optimizes data copying in memory, boosting execution efficiency.

EIP-6780 - Restrict SELFDESTRUCT: Strengthens network security and prevents malicious operations.

How Much Performance Improvement

This is the data investors care most about. After the Cancun upgrade, Ethereum’s performance will see a qualitative leap:

Transaction Throughput: From about 15 TPS to nearly 1,000 TPS, an increase of 50-60 times.

Network Fees: Mainnet Gas fees will be optimized, but Layer-2 will be the biggest winner—fees are expected to drop from the current $0.01-0.1 to below $0.001.

Scalability: With EIP-4844 and subsequent full Danksharding, Ethereum’s overall scalability will increase by 100-1000 times.

What It Means for Users and Developers

For Traders: Fees will drop significantly, especially when using Layer-2 solutions (Arbitrum, Optimism, etc.), making small transactions feasible.

For Developers: Proto-Danksharding provides about 1 MB of fixed data bandwidth per slot, enabling the development of more complex and efficient DApps, greatly expanding innovation space.

For Stakers: The upgrade enhances ETH liquidity staking features, allowing users to stake while maintaining liquidity, with no change in yields.

Risks to Watch During the Upgrade

Any large-scale system upgrade carries risks:

Technical complexity may lead to unforeseen vulnerabilities; existing smart contracts need to adapt to new mechanisms, and there may be compatibility issues during the transition; network instability risks are small but present.

However, Ethereum development teams have conducted multiple testnet drills to mitigate these risks.

Outlook After the Upgrade: When Will Full Danksharding Arrive

Dencum is just the beginning. Proto-Danksharding is an intermediate step toward full Danksharding. Once the Cancun upgrade stabilizes, Ethereum will enter the era of full sharding—the entire network will be divided into multiple parallel processing shards, each operating independently.

By then, Ethereum’s scalability and efficiency will reach new heights, truly becoming the infrastructure supporting large-scale Web3 applications.

Market Opportunities and Ecosystem Impact

The Dencum upgrade is highly significant for the Ethereum ecosystem. Layer-2 projects will benefit (fees greatly reduced, attracting users), DeFi and NFT applications will have more room for development, and the staking ecosystem will expand due to increased liquidity staking.

For traders, this is a key moment to participate in Ethereum’s long-term growth— infrastructure upgrades usually precede application prosperity.

Summary: The Cancun-Deneb upgrade is an important milestone in Ethereum 2.0’s roadmap, with EIP-4844’s Proto-Danksharding being a critical step toward scalability. From testnets to mainnet, from fee optimization to ecosystem expansion, this upgrade will profoundly change Ethereum’s competitiveness and user experience.