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Find out how ethereum's Dencun upgrade could improve security and reduce transaction fees.
The ethereum (eth) network will receive a major update called “Dencun,” a combination of two smaller updates, Cancun and Deneb. The upgrade is expected to significantly reduce Layer 2 (L2) transaction fees and improve ethereum's scalability, efficiency, and security.
ethereum's upgrade date is scheduled for March 13, with a February 27 entry on the ethereum Foundation Blog announcing that it was successfully activated on all test networks, including Goerli, Sepolia, and Holešky.
So what is the ethereum Dencun upgrade? Read on to find out why it's causing so much excitement among the ethereum community.
ethereum's journey and its next big step
In December 2020, ethereum introduced Beacon Chain, which incorporated the proof-of-stake (PoS) consensus mechanism and allowed eth to be staked; This was essential in moving ethereum away from the older proof-of-work (PoW). consensus method.
In September 2022, ethereum had made a big move called “The Merge”, linking its mainnet with the Beacon Chain and completely switching to proof-of-stake. In April 2023, the Shanghai update allowed users to withdraw staked eth, making it easier for validators (people who help verify transactions) to manage their stakes.
On September 28, 2023, ethereum launched a new testnet called Holešky, which supports 1.4 million validators and is a critical step for the eth Dencun upgrade.
Many have asked what the main goal of ethereum's Dencun upgrade is. Looking back, previous upgrades to the ethereum network were more about laying the groundwork for a more sustainable and secure ethereum than directly addressing the issue of scalability.
The merger was intended to move to a greener and more efficient transaction verification system, and the Shanghai upgrade improved the way people can stake their eth. The eth Dencun upgrade, a fusion of two fundamental improvements, is considered by many to be the culmination of the journey started by previous upgrades to make ethereum a faster, more secure, and scalable network.
The first part of the update, Cancun, focuses on the “execution layer”: how transactions are processed and managed. The second part, Deneb, addresses improvements to the “consensus layer,” which is about how network participants agree on the state of the blockchain.
Improvements for a better ethereum
The Dencun upgrade brings several technical improvements to solidify the ethereum infrastructure. For example, it introduces techniques for more streamlined data management and smarter contract security, along with tweaks that promise to make ethereum run smoothly and profitably for its users.
It also aims to improve the experience of those staking eth, making it easier and more beneficial for users to participate in the security of the network.
proto-danksharding
Among the notable features of Dencun is proto-danksharding, which was introduced through a specific ethereum Improvement Proposal (EIP) known as EIP-4844. In simpler terms, this feature aims to make ethereum more scalable by efficiently managing large amounts of data.
It uses a method that temporarily retains transaction data, making the process simpler and cheaper.
Traditionally, all transaction data is permanently stored on the blockchain. However, this new approach introduces a way to include large amounts of data (blobs) in transactions without storing them forever.
Proponents say it will make transaction processing faster and cheaper, especially for accruals. Rollups bundle multiple transactions into one, reducing the workload and cost (gas) of recording them on the ethereum network.
While rollups are already a step forward in managing transactions more efficiently, they still leave room for improvement. Until now, data collected by rollups had to be permanently stored on the blockchain, which took up space and potentially slowed things down.
Proto-danksharding proposes a way to store this data temporarily and delete it after a certain time. It is done by creating a summary (or commit) of the data, ensuring that even after the detailed data is deleted, the integrity of the transactions is not compromised.
What's more, this approach means that only temporary data storage is necessary, significantly reducing clutter and maintaining the speed and efficiency of the ethereum network. This temporary storage could last a few months before the data is deleted to avoid unnecessary information overload.
Improved security and performance
ethereum's most recent update introduces several EIPs aimed at making the network more secure and efficient.
A notable feature is ethereum.org/EIPS/eip-4788″ target=”_blank” rel=”noreferrer noopener”>EIP-4788, which improves the way information travels within ethereum, particularly improving the connection between its execution and consensus layers. In the past, these layers worked together as separate entities, ensuring that for every block of data in one layer, there was a corresponding block in the other.
However, getting these layers to talk to each other can be quite complicated and sometimes even need additional help from external services.
With the new update, this process becomes simpler by embedding a summary from the consensus layer directly into the current execution layer data block. This summary acts as a bridge, allowing direct access to consensus layer information without the need for intermediaries, making the system more reliable.
Additionally, this update supports ethereum applications by keeping a record of these digests in a smart contract, making it easier to verify the status of the consensus layer.
Improved bet
Dencun is also on a mission to improve the ethereum staking experience.
Proposals such as EIP-7044 and EIP-7045 aim to streamline the process of exiting and completing certifications, making it easier to use. Here's a simple breakdown:
EIP-7044 is expected to simplify earning ethereum rewards for those who prefer not to be full validators. Since ethereum moved to a proof-of-stake (PoS) model, people can earn rewards by staking 32 eth. However, those who are not interested in managing the technical aspects of being a validator can opt for delegated participation. With delegated staking, you stake your eth through a third party while retaining control over your assets. Previously, stopping staking with a specific validator required a pre-signed exit message, which depended on trust. EIP-7044 aims to make these outgoing messages permanent, providing more security and peace of mind.
Meanwhile, EIP-7045 seeks to improve the efficiency and competitiveness of the ethereum network. For a block to be considered official, it needs validations or certifications from validators. Currently, validators have a limited time period to submit these certifications. However, EIP-7045 proposes to extend this period significantly. This change would allow more validators to earn rewards and, more importantly, speed up the confirmation of blocks on the blockchain.
Greater profitability
The upcoming update will also introduce significant cost-effectiveness improvements, particularly those highlighted by innovations such as EIP-5656 and EIP-1153.
These changes focus on optimizing smart contract functionality and improving temporary storage techniques. Specifically, EIP-5656 introduces an opcode, or opcode, called MCOPY, intended to increase the efficiency of memory copying within the ethereum Virtual Machine (EVM).
This opcode simplifies the process by replacing the previously cumbersome method involving the MSTORE and MLOAD opcodes, offering a more streamlined and effective approach.
Further addressing efficiency, EIP-6780 targets ethereum.stackexchange.com/questions/59780/is-selfdestruct-a-good-practice” target=”_blank” rel=”noreferrer noopener”>controversial SELF-DESTRUCTION opcode. While it is widely used in numerous smart contracts, its problematic nature has caught the attention of the community.
Through EIP-6780, the goal is not to completely remove SELFDESTRUCT, which would impact existing contracts, but to make it obsolete for future applications, effectively shelving it without a direct removal.
These improvements aim to make staking on ethereum more flexible, secure, and efficient for everyone involved.
Simplifying ethereum Growth
Another proposal in the next ethereum update is EIP-7514, and it is about managing how many new validators can join ethereum at once. Too many validators joining too quickly could cause problems, such as making some tasks more difficult or leaving too much control in the hands of a few important players.
EIP-7514 plans to limit to 8 the number of new validators that can start each epoch (a set period on the ethereum network). This change is intended to make validator growth more consistent rather than jumping quickly. It's like inviting only a certain number of people to a party to make sure it doesn't get too crowded.
Another important part of this proposal is that it treats entry and exit differently. More specifically, the limit only applies to new validators who join, not those who want to leave.
While it may seem like a small adjustment, it is an important step to keep ethereum running smoothly and ensure it is ready for future changes and growth. By doing this, ethereum hopes to maintain its security and decentralization, ensuring that no one group has too much power and keeping the network accessible and fair for all users.
A cautious but optimistic outlook
While the Dencun upgrade offers promising prospects for improving ethereum, developers are proceeding cautiously. The introduction of new consensus mechanisms and architectural changes could bring unforeseen complexities and operational obstacles.
Additionally, network upgrades inherently involve uncertainty, as unexpected technical issues can temporarily impact user experience and network stability. Concerns include potential challenges related to storage capacity and data management with the introduction of larger data blocks.
To fully embrace this transformative improvement, stakeholders must exercise caution and conduct extensive due diligence.
However, the anticipation around ethereum's next upgrade underscores a strong belief in its benefits, reaffirming the network's commitment to continuous improvement.
