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Ether (ETH) price hovered near the $4,000 mark as a series of network upgrades collectively known as the Deneb-Cancun or Dencun upgrade went live on March 13, 2024.
The Dencun upgrade is the most significant Ethereum upgrade since The Merge, when Ethereum transitioned into a proof-of-stake blockchain in September 2022. Unlike The Merge, the Dencun upgrade is expected to directly improve user experience by massively reducing gas fees on L2 networks with the implementation of EIP-4844 or proto-danksharding.
In this article, we explain the Ethereum Dencun upgrade and its implications. We also talk to Ethereum developer Marius van der Wijden to get his expert opinion on the Dencun upgrade.
Key Takeaways
- The Dencun upgrade consists of nine Ethereum improvement proposals implemented on March 13, 2024.
- EIP-4844, or proto-danksharding, is the headline upgrade, which will lower gas fees on L2s.
- However, the Dencun upgrade is not expected to lower gas fees on L1.
- Ethereum developer Wijden highlighted EIP-4788 and EIP-6780 in his interview with Techopedia.
- Show Full Guide
What is the Ethereum Deneb-Cancun (Dencun) Upgrade?
The Dencun upgrade is an Ethereum upgrade that marks the start of “The Surge” era of the Ethereum roadmap. During “The Surge,” Ethereum will prioritize scalability and will aim, according to Ethereum co-founder Vitalik Buterin, to hit “100,000 transactions per second and beyond.”
The Dencun upgrade consists of nine Ethereum improvement proposals (EIPs), including EIP-4844 or proto-danksharding, which will introduce temporary storage space called “data blobs” for Ethereum L2 networks to use.
The extra storage space enabled by temporary data blobs will increase the data availability capacity of the Ethereum mainnet. L2 rollups can now use this extra space to efficiently submit their data to the mainnet, ultimately leading to reduced L2 gas fees for the end user.
For this reason, proto-danksharding is widely expected to “facilitate an ecosystem-wide move to rollups.”
Expert Insight: Ethereum Developer Marius van der Wijden on Dencun Upgrade
Techopedia reached out to Marius van der Wijden, software developer at Geth, Ethereum, to hear his thoughts on the Dencun upgrade.
Q: Much of the attention is on EIP-4844 due to its implications on L2 gas fees. Is there any other Dencun EIP that you think is worth highlighting?
A: I think both EIP-4788 and EIP-6780 are often forgotten, but they are really neat, in my opinion.
EIP-4788 introduces the beacon block root into the EVM, this means that you can now build contracts that read and verify data from the beacon chain.
This is extremely useful, for example, for building trustless staking pools, and I hope there will be more cool projects taking advantage of this new primitive, I could imagine restaking protocols also using this operation.
EIP-6780 gets rid of the SELFDESTRUCT opcode, which enables us to move to a stateless world.
Q: Will end-users see an immediate reduction in L2 gas fees when EIP-4844 goes live on March 13, 2024?
A: I don’t think there will be an immediate reduction (on March 13), I don’t know how far along the L2s are with rolling out their blob support, but I would suspect that it takes them a few days/weeks to fully support EIP-4844 and not post their data as CALLDATA but switch to blobs.
EIP-1153, which allows for cheaper re-entrancy locks, will also need some time to be adopted by protocols.
So I think there will be more of a gradual increase in capacity than a sudden reduction of fees on L1 and sudden reductions on L2 once they switch to blobs.
Q: Will the Dencun upgrade result in better/cheaper mainnet-to-L2 bridging experience?
A: I’m not an expert on L1-L2 bridges, but I don’t think that the bridging experience will change with 4844, the costs might slightly decrease but not substantially.
I think we started to see the rise of protocols directly onboarding users to L2 without going through L1 first, which is a great thing in my opinion.
Ethereum Dencun EIPs Explained
Let’s understand the nine EIPs that will be implemented during the Dencun Ethereum upgrade, as explained by the Ethereum protocol development team.
- EIP-1153 – EIP-1153 introduces two EVM opcodes called TLOAD and TSTORE that erase themselves at the end of each transaction. As the new opcodes are not stored in Ethereum’s global state, they are expected to make gas fee usage more efficient.
- EIP-4788 – This ETH upgrade exposes the Ethereum Beacon chain’s block roots to the EVM by storing them in a smart contract on the execution layer.
- EIP-4844 – Proto-danksharding will introduce temporary data blobs that rollups can use to store a part of the transaction data. The temporary data blobs will not interact with the EVM allowing lower gas fees and will enable Ethereum nodes to stay slim.
- EIP-5656 – EIP-5656 introduces a new EVM copycode called MCOPY which will provide a simpler and cheaper way to copy memory in the EVM.
- EIP-6780 – EIP-6780 will update the SELFDESTRUCT opcode to only delete a contract if the opcode is called within the same transaction as the contract creation.
- EIP-7044 – EIP-7044 will remove restrictions on the validity of a validator exit message.
- EIP-7045 – This Ethereum upgrade increases the period during which an attestation can be included in a Beacon Chain block.
- EIP-7514 – EIP-7514 adds a hard cap on the number of validators that can be activated during each epoch.
- EIP-7516 – This ETH upgrade introduces a new opcode called BLOBBASEFEE which returns the value of the blob base-fee of the current block it is executing in.
6 Key Benefits of the Dencun Ethereum Upgrade
In this section, we summarize how the Dencun upgrade will benefit the Ethereum ecosystem.
1. Enhanced Scalability
Dencun upgrade will increase Ethereum’s network throughput. This will mainly be achieved through proto-danksharding, which will introduce temporary storage space that L2 rollups can use to attain higher transaction volume per second.
2. Reduced Gas Fees
Proto-danksharding will reduce gas fees on L2 rollups. At the time of writing, it costs less than $0.90 to swap tokens on optimistic L2 rollups like Optimism and Arbitrum One, compared to over $16 on the Ethereum mainnet. Meanwhile, token swap gas fees on zero knowledge (ZK) rollups like Polygon zkEVM cost about $1.6.
With proto-danksharding, gas fees on optimistic and ZK rollups will reduce further, which will enable them to compete with global payment giants like Visa and Mastercard, who are themselves exploring the blockchain and various L2s.
According to Superchain Savings Estimator, gas fees on a token swap on Base L2 will reduce from a previous cost of about $0.58 to $0.01 after EIP-4844.
after 2 years of hard work, blobs are now live on @base
before: $0.31
after: $0.00 (but actually $0.0005)wallets need to update to handle these cost reductions! pic.twitter.com/solIX9D4HM
— Jesse Pollak (jesse.xyz) 🛡️ (@jessepollak) March 14, 2024
3. Enhanced Security
The Dencun upgrade will implement EIP-6780, which will disempower the SELFDESTRUCT code. The upgrade will limit the termination of smart contracts, increasing the protection of user data and their funds.
4. Improved Cross-Chain Communication
The Dencun upgrade will enable seamless and safe interactions between various blockchain networks through EIP-4788 as the upgrade is expected to improve cross-chain bridges and stake pools.
5. Better Data Storage
Changes proposed by EIP-1153 are set to optimize data storage on the Ethereum blockchain. EIP-1153 will introduce new opcodes that are not stored in Ethereum’s global state which will optimize block space usage and make gas fee usage more efficient.
6. Setting the Stage for Full Danksharding
The ultimate goal of Ethereum for The Surge is to achieve full danksharding, which is expected to enable “100,000 transactions per second and beyond” on Ethereum.
However, danksharding is still “several years away” as multiple network upgrades – including proposer-builder separation – need to be implemented first. In the meantime, proto-danksharding will be introduced as a stepping stone during the Dencun upgrade.
According to Ethereum developers, the number of data blobs will increase from one per block in proto-danksharding to 64 in full danksharding.
Experts Do Not Expect Dencun Upgrade to Lower Gas Fees on Ethereum Mainnet
Max Wadington, Fidelity Digital Assets Research Analyst, said on YouTube that there are three key takeaways about the Dencun upgrade:
- The data blobs will be stored on the Ethereum mainnet for only 18 days, allowing increased data availability without bloating Ethereum nodes.
- The Dencun upgrade is “unlikely” to lower gas fees on the Ethereum mainnet.
- The Dencun upgrade “marks a significant shift in the focus of Ethereum, going from servicing users directly to servicing other blockchains.”
Meanwhile, Ethereum developer Tim Beiko in conversation with Consensys said that the Dencun upgrade could help decongest the Ethereum mainnet.
“This (Dencun upgrade) is a way where we can move more and more transaction activity off the main Ethereum network, which decongests it and then offers lower costs to users,” Beiko said.
The Bottom Line
The Dencun upgrade is considered to be the most significant Ethereum upgrade since The Merge.
We have seen other Ethereum upgrades in between like Shanghai – which allowed users to unstake their staked ETH in April 2023 – but Dencun upgrade via proto-danksharding is expected to directly affect most Ethereum users by lowering gas fees paid on L2s.
