Ethereum, the prominent proof-of-stake blockchain, is undergoing a significant upgrade known as ‘Dencun,’ which introduces a new feature called ‘proto-danksharding.’
The Dencun upgrade was activated on the Sepolia testnet at the end of January 2024 following its activation on the Goerli testnet. It constitutes a part of Ethereum’s broader strategy to improve scalability and decrease transaction costs for its users.
Proto-danksharding is designed to lower transaction costs for layer-2 blockchains and diminish data availability expenses, tackling crucial scalability hurdles. It sets the foundation for the eventual deployment of ‘danksharding,’ which seeks to expand these advantages even further.
At @EthereumDenver we hacked together a full data-blob-transaction prototype! (a.k.a. mini-danksharding)
Data blobs are the first milestone towards full ethereum sharding, enabling rollups like @optimismPBC to grow 100x in capacity.
Here's a tweet thread about the prototype 🧵
— proto.eth (@protolambda) February 20, 2022
Following full implementation, Dencun is anticipated to substantially augment Ethereum’s transaction processing capacity, potentially enabling the network to manage over 100,000 transactions per second. This advancement is critical for Ethereum’s capability to accommodate a burgeoning ecosystem of decentralized applications (dapps) and users.
The deployment process for the Dencun upgrade involves activations on different testnets, with the Sepolia, Goerli, and Holesky testnets already concluded.
Blobs are coming to Ethereum mainnet
🐡🐡🐡🐡🐡🐡🐡🐡🐡🐡🐡🐡🐡🐡
13 March 2024, 13:55:35 UTC
— Nethermind (@NethermindEth) February 8, 2024
One notable technical innovation introduced by Dencun is ‘blobs.’ These are designed to decrease the cost associated with rollups on the Ethereum mainnet by compressing transaction data off-chain, thereby reducing storage and processing requirements.
Blobs temporarily store data, which is only necessary for short-term transaction verification, allowing for its eventual deletion to prevent network overload. Secure and efficient data handling is ensured through cryptographic commitments that detect any data alterations.
Ethereum Outlook
By significantly enhancing Ethereum’s transaction processing capacity and reducing costs, Dencun may attract more developers and users to the Ethereum ecosystem. This increased utility and adoption could drive demand for ETH, potentially impacting its price which has been doing well, reaching $3,000 for the first time in 2 years on February 20 2024.
MILESTONE | Ethereum ( $ETH ) Hits $3,000 for the First Time in 2 Years
The last time Ether traded above $3,000 was nearly 22 months ago, in April 2022 on its way from its all-time high of $4,891.70 which was recorded on November 16, 2021. This was followed by a prolonged bear… pic.twitter.com/RwyGivZqQO
— BitKE (@BitcoinKE) February 21, 2024
The successful deployment of Dencun could bolster investor confidence in Ethereum’s long-term viability and its development team’s capability to execute complex upgrades. This could be key given a decision from the Securities Exchange Commission on Ethereum ETFs is expected in May 2024.
Dencun could help Ethereum compete in terms of scalability with faster chains in the smart contract platforms crypto sector, such as Solana.
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