The Ethereum network, with its cryptocurrency ETH guarantee decentralization and use cases for decentralized finance (DeFi) like decentralized exchanges or web3 capability by its smart contract possibility (self executed contracts). Ethereum is supported by The Ethereum Foundation started in 2015 and went through some major updates for now, like the Merge or the Shanghai update.
These updates help the blockchain to be the main competitor of Bitcoin. All of them was successful changes, but by time demands also changed about the network that led to scalability issues that occurs high transaction costs. The adoption of this update could be a key moment in Ethereum’s life and probably a good chance to use your digital asset to invest in ETH. In this article we introduce you the upcoming Ethereum implementation called the Cancun-Deneb or DenCun update, which is the part of the Ethereum Roadmap and focus on solve scalability, efficiency and security issues of the blockchain.
What is The Dencun Update? – The Next Ethereum Update 2024
The Ethereum Cancun-Deneb update, also known as Dencun, is a significant update to the Ethereum network, scheduled for the first quarter of 2024. This update consists of two parts: Deneb, which targets the Consensus Layer (CL), and Cancun, which improves the Execution Layer (EL).
The Dencun update includes a number of Ethereum Improvement Proposals (EIPs) with the aim to make better Ethereum’s network in various ways:
- Proto-Danksharding (EIP-4844): This is a major component of the update, focusing on Ethereum’s scalability. Proto-Danksharding introduces “blobs,” large data packets that facilitate carrying more data in transactions at lower costs. EIP-4844 will allow rollups to process transactions more cheaply by introducing temporary data blobs to each block.
- EIP-1153: It aims to optimize on-chain data storage costs, making efficient use of block space.
- EIP-4788: Improves the architecture of cross-chain bridges and staking pools, increasing security and functionality.
- EIP-5656: Proposes modifications to the Ethereum Virtual Machine (EVM) to boost its performance.
- EIP-6780: Advocates for the removal of the SELFDESTRUCT feature in smart contracts, which will enhance network security.
The update is expected to bring several benefits, such as improved scalability, reduced gas fees, optimized data storage, and better cross-chain communication. The introduction of Proto-Danksharding is significant as it will boost transaction processing speeds and volumes, which is beneficial for Layer 2 solutions built on top of the main Ethereum blockchain.
The Dencun update is expected to increase Ethereum’s transaction processing capacity significantly, potentially reaching up to 100,000 transactions per second (TPS). This improvement marks a critical step towards achieving the ‘Surge’ phase in Ethereum’s development roadmap.
While no specific date has been announced for the mainnet activation of the Dencun update, it has already been scheduled for testing on various testnet networks like Goerli, Sepolia, and Holesky, with Goerli being the first in January 2024.
It’s important to note that with such significant updates, there are potential risks, particularly regarding the impact on existing smart contracts and the integration of new data storage techniques. These factors require thorough testing and careful consideration during the implementation phase.
What Is An Ethereum Improvement Proposal (EIP)?
Ethereum Improvement Proposals, known as EIPs, are a way to make changes to the Ethereum network. It all starts with an idea. Anyone interested in Ethereum can come up with an idea for improving it. They write their idea down in detail, making sure it’s clear and technically strong. This written idea, or proposal, is then shared on Ethereum’s online platform (GitHub). Here, it’s like a first draft waiting for others to see and talk about.
Next, the Ethereum community, which includes people who develop Ethereum, those who maintain it (miners), and others who use it, start discussing this proposal. This is a crucial time for people to share different views and make the proposal better. If people are interested in the proposal, it goes through a deeper check. This is to make sure the idea works well with Ethereum’s current setup and goals.
Before making a final decision, there’s a period where anyone can give their last comments or concerns about the proposal. If the proposal gets through all these steps without major issues, it’s marked as ready or accepted. But this doesn’t mean it’s part of Ethereum yet. It just means it’s a good candidate to be added in a future update.
The last step is actually adding the proposal into Ethereum’s system. This is usually done by the main people who take care of Ethereum or by the person who originally thought of the idea.
Throughout this whole process, many different people from the Ethereum community are involved. This way of making decisions is open and driven by the community to make sure changes to Ethereum are well thought out and useful.
This approach shows that Ethereum is all about making decisions together and constantly improving, considering the different needs and ideas of its community.
The Bottom Line
Ethereum core developers, led by figure like Vitalik Buterin (co-founder of Ethereum) take care about the network by developing major updates time by time in the life of Ethereum. The last update was the Shanghai update, which was implemented in April 2023. This update made possible the withdrawal of staked ETH for the first time since the network transitioned to Proof-of-Stake
In the crypto ecosystem demands changing fast, so these kind of updates needed to keep the up to date. The next update, the Ethereum CanCun update, as we wrote is also a milestone step for the blockchain and currently undergoes testing on Goerli testnet. It can decrease transaction fees independently from the transaction volume. These changes helps Ethereum protocol to keep its second place on the crypto ranking list and be still a great opportunity for any investor. We think after January’s Bitcoin ETFs approval this can be the next big step in the crypto world.
UPDATE (01/18/2024): The update had finality challenges on the Goerli testnet on Wednesday. It could happen because of the few numbers of validators. The developers work on the problem and they think they can keep the Q1 of 2024 start of the update at the mainnet.
One of their developer said:
It will take time to accurately evaluate the status. Therefore, before someone claims that the Goerli hard fork failed and Deneb is delayed, we should allow time for a proper analysis.” – Terence
UPDATE (03/14/2024): The Dencun upgrade successfully implemented to the network on 13th of March. That means users can experience smoother and cheaper transactions on Layer-2 platforms. NOTE: this update doesn’t affect the base Ethereum blockchain, so the fees are still high there.
