Dencun will mark a significant milestone in the blockchain's evolution towards becoming a scalable settlement layer, its primary impact will be a substantial increase in data availability for layer-2 rollups through a groundbreaking protocol known as proto-danksharding. This, in turn, will lead to a notable reduction in rollup transaction costs, benefitting end-users.
To better understand the significance of this upgrade, let's delve into the key concepts at play:
- Layer 1 vs. Layer 2: In the world of blockchain, a layer 1 network forms the foundation, serving as the underlying infrastructure. Layer 2, on the other hand, represents a set of off-chain systems or separate blockchains constructed on top of layer 1. Rollups, which are instrumental in Ethereum's scalability strategy, facilitate faster transaction processing on a secondary blockchain or layer 2. The processed data is then securely ported back to the parent blockchain, all at a fraction of the cost.
- Proto-danksharding: This innovative protocol is poised to set the stage for future scalability enhancements, including danksharding, as part of Ethereum's ambitious 'Surge' roadmap. Danksharding, akin to shard-based scaling, focuses on expanding data storage capacity instead of transaction throughput.
The Dencun upgrade promises to bring a multitude of advantages, including enhanced scalability through rollups, optimized gas fees, improved network security, and a series of housekeeping updates aimed at streamlining Ethereum's functionality.
The path to Dencun has been marked by the Ethereum developer community, which recently reached a consensus on the upgrade's comprehensive scope.
It is important to note that this upgrade, often referred to as a hard fork, is expected to be implemented later in the year and will introduce five Ethereum Improvement Proposals (EIPs) aimed at enhancing the network's performance and user experience.
- EIP-4844 (Proto-danksharding): This central feature will expand Ethereum's storage capacity, ultimately leading to reduced gas fees for layer 2 rollups.
- EIP-1153: This proposal seeks to reduce fees associated with on-chain data storage, resulting in an improvement in block space utilization.
- EIP-4788: Focused on optimizing bridge designs and staking pools, this EIP aims to enhance the overall network infrastructure.
- EIP-5656: This proposal introduces minor code changes related to the Ethereum Virtual Machine, enhancing the platform's efficiency.
- EIP-6780: By eliminating code that could terminate smart contracts, this proposal enhances the reliability of Ethereum's smart contract ecosystem.
The Dencun upgrade is unique in that it encompasses simultaneous enhancements occurring on two fronts of the Ethereum blockchain. The "Cancun" upgrade will focus on the execution layer, where protocol rules are enforced, while the consensus layer, responsible for validating blocks, will undergo its own transformation referred to as "Deneb." The amalgamation of these two upgrades is aptly represented by the portmanteau name "Dencun."