Ethereum update: What to expect from the Dencun Upgrade

Ethereum (ETH) continues to evolve and its latest hard fork is the Dencun Upgrade. It was rolled out on 13th March 2024 at 1:55 PM UTC, forever changing the state of the world’s biggest smart contract blockchains. It made no changes to how ETH tokens work, but it proposes a new sharding system to make the network more efficient. 

Key Takeaways

• The Dencun Upgrade is a new hard fork introducing proto-danksharding that helps Ethereum handle more transactions at once.
• The Dencun Upgrade made Ethereum run smoother overall, similar to a major software update that helps the network function better. 
• Ethereum improved its scalability and cost efficiency as a blockchain network. 

The Dencun Upgrade is still new to Ethereum so it is understandable that many people are unaware of it and why it’s needed. This guide will explain what it does and its purpose in decentralised finance (DeFi).

What is the Ethereum Dencun Upgrade?

Ethereum Dencun Upgrade is a hard fork, an update on the blockchain that involves changing its programming. Since the new changes were significant, they won’t be compatible with the older versions, resulting in the need to create a parallel version also known as a ‘fork’. Ethereum users moved their addresses and assets to a new network where the Dencun Upgrade is the standard. 

Dencun is also a combination of two different upgrades happening at the same time, but applies its changes to different blockchain layers. One of its parts is Cancun, the shift in the execution layer, and the other is Deneb, the upgrade for the consensus layer. Together, they are called ‘Dencun’, and are treated as one hard fork for Ethereum.

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How does the Dencun Upgrade work?

Unlike its previous forks, Ethereum didn’t go through a massive overhaul. Instead, it simply focused on a specific problem: the rapidly increasing gas fees in the network. Dencun provides a restructuring of how Ethereum’s consensus layer handles data to make it more affordable. Here are the features of Dencun Upgrade and how they work to serve Ethereum:

Proto-danksharding with EIP-4844

The true goal is to introduce danksharding, a sharding mechanism that aims to make Ethereum truly scalable by being compatible with rollups. However, it is not possible without a solid foundation and that is where the Cancun Upgrade comes in. It seeks to replace Ethereum’s calldata solutions with much better data blobs made possible by Ethereum Improvement Proposal (EIP)-4844. 

The main difference between danksharding and proto-danksharding is how the latter cannot fully realise the Ethereum developers’ intended vision. It cannot support transactions for more than 100,000 unlike true danksharding but it can do so for more than 10,000 transactions. It’s still a step in the right direction because proto-danksharding is the foundation for true danksharding. 

Blob reduced fees and made transaction validation more efficient

Data blobs work great in helping validators large volumes of data on the Beacon Chain, which is the foundation on which Ethereum 2.0 is built. How this works is that data blobs process transaction validation outside of the mainnet, thereby reducing the workload for the Ethereum consensus system. This delegates that workload to another network, maximising the Beacon Chain’s functionality in coordinating validators more smoothly. 

Better security using EIP-4788 and EIP-6780

The Dencun Upgrade emphasises the blob and rollups but it also included several changes to how security is handled on Ethereum. Those changes are specifically EIP-4788 and EIP-6780 to reinforce security on the consensus and application layers. 

EIP-4788 creates a communication link in the Ethereum consensus layer and validators to safeguard the network and the execution layer.  EIP-6780 creates a sensitive self-destruct mechanism for smart contracts. It triggers when it is compromised by bad actors, thereby protecting the assets it holds. 

Dencun Upgrade benefits for Ethereum users and developers

The following benefits are the main motivation behind the development of the ETH Dencun Upgrade. Future EIP will be built on top of these changes and will further improve its features. As an Ethereum user, these are the benefits you can expect to enjoy:

Cheaper fees make the network more attractive to developers

While the proto-danksharding isn’t entirely what the developers wanted for Ethereum, it still serves a big purpose like reducing fees for layer-2 operations. This is possible because the blob is efficient at organising and processing data rollups. What happens is that the workload for validators becomes much lighter, faster, and cheaper.

Easier experience developing DApps on Ethereum

Validators and developers were having difficulties in the changing gas fee system because Ethereum continues to grow. The Dencun Upgrade is a solution that was meant to address those concerns because layer-2 plugins are no longer enough. 

Proto-danksharding streamlines processing for validators and reduces costs for developers. Therefore, it creates a more sustainable and scalable platform for more DeFi projects on Ethereum. 

Expanded Ethereum layer-2 projects’ potential for adoption 

Ethereum’s ever-growing community attracts Web 3.0 developers and investors. However, many of them are deterred by the network’s problems in increasing gas fee prices and the worsening state of layer-2 communications. The Dencun Upgrade mitigated these issues, making adoption more likely for Ethereum and its layer-2 solutions. 

Ethereum is in a much better state for users and developers

Ethereum retains its status as the biggest platform for DeFi and Web 3.0 development, thanks to its many upgrades over the years. The Dencun Upgrade is one of many that made the network much more scalable than ever both in terms of cost efficiency and sustainability. 

More layer-2 projects are coming to the crypto economy which will further expand ETH’s value as a utility token. Look forward to its increased market price in the immediate future when you wish to trade your ETH winnings from Gamdom betting. 

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