Ethereum Developers Are Discussing The Plan For The Dencun Upgrade

Not that long ago, the Ethereum blockchain underwent the Shanghai and Capella upgrades; the former impacted ETH’s execution layer, while the latter targeted the Consensus Layer. The network upgrades seem to have pushed Ethereum’s price higher, attracting a lot of investors (and speculators) in the cryptocurrency market. If you haven’t considered this asset class in the past, it’s high time you take ETH seriously. As you learn more about how to buy Ethereum, you’ll find that it’s better to purchase tokens on an exchange; it’s your responsibility to pay the gas fees.

Ethereum’s developers have proven they’re committed to steadily improving the network. The much-awaited Shapella Upgrade is live, and ETH has many more upgrades in the pipeline to enhance scalability, security, and sustainability. Surprising or not, developers are preparing for the upcoming upgrade on the Ethereum Mainnet, the Dencun upgrade, that will reduce transaction fees, expected in late 2023. If all goes as hoped, it will enable new use cases. According to Tim Beiko, Protocol Support for the Ethereum Foundation, the developers are in the final stages of planning for Dencun, having a provisional set of EIPs.

What’s New in The Recent Ethereum Upgrade?

The Dencun upgrade combines two upgrades, namely Deneb (the Execution Layer upgrade) and Cancun (the Consensus Layer upgrade). Some of the main improvement proposals considered for inclusion are:

• EIP-4844. Also referred to as Proto-Danksharding, EIP-4844 introduces temporary “data blobs” to the Beacon Chain for a short period of time. The format will be fully compatible with that used in full sharding. This proposal will lower the gas cost of Layer 2 transactions considerably. The new transaction format, i.e., the blob, is contained within the Prismatic Client, but not the execution environment.
• EIP-6780. It deactivates the SELF DESTRUCT opcode, which allows for creating and erasing contracts within a single transaction. The issue of not knowing what storage to delete doesn’t occur. The operation sends all the ETH in an account to the caller, excluding when SELF DESTRUCT is called within the same transaction a contract was created.
• EIP-1153. This proposal brings about two new opcodes, namely TSTORE and TLOAD, which enable storage to be used provisionally. Transient storage is more affordable since it doesn’t require disk access and allows better smart contract designs. Use cases include single-transaction ERC-20 approvals and re-entry locks.
• EIP-6475. Simple Serialize types are introduced to represent Optional [T] values. SSZ structures with optional values can be represented with the idiomatic types of the underlying programming languages. Using simple serialize encoding, developers guarantee transaction formats are forward-compatible.

Besides the EIPs that are formally part of the Dencun upgrade, client teams have proposals that might be included. Let’s take EIP-2537 as an example. It focuses on the BLS12-381 curve, used for signatures within Ethereum 2.0. There’s no denying that Dencun is an essential step in Ethereum’s development, but let’s not forget that it’s still a work in progress.

Ethereum Is Undergoing a Period of Tremendous Transformation

People are becoming increasingly comfortable with blockchain technology, and the more they use it, the more they rely on it. As Ethereum advances, we continue to see more changes; it’s hard, if not impossible, to anticipate its next move. Over the years, ETH has managed to adapt as new ideas have emerged from research and development, positioning itself as a powerful contender in the cryptocurrency industry. It faces regular updates meant to improve its technical capabilities, mainly realized with hard forks. Once the Dencun upgrade is live, Ethereum will undergo three critical updates: the Verge, the Purge, and the Splurge.

The Verge upgrade attempts to reduce the amount of data that validators must store on their machines; it will introduce Verkle trees for vector commitments and stateless protocols to make the Ethereum network more lightweight. As highlighted by Vitalik Buterin, it will be possible to launch nodes without having hundreds of gigabytes on your computer. The Purge upgrade is expected to remove legacy transactions and data from the post-Merge era when ETH relied on the Proof of Work consensus mechanism. Nodes will require less storage and bandwidth to sync with the network. What is more, the Purge will introduce sharding, used to disperse data among the nodes for effective management of big data.

Finally, yet importantly, the Splurge upgrade aims to boost scalability and efficiency via rollups, a type of Layer 2 solutions that perform transaction execution outside the blockchain. It can be defined as a series of smaller upgrades striving to ensure the network runs as smoothly as possible. In other words, the Splurge combines several improvements that weren’t included in the earlier upgrades. By the time the Verge, the Purge, and the Splurge are over, Ethereum will be different from what we know today.

Wrapping It Up

For the time being, it’s impossible to determine how the Dencun upgrade will impact the Ethereum network. From experience, we know that upgrades are applauded by the cryptocurrency community, so a surge in ETH deposits isn’t out of the ordinary. It’s highly unlikely there will be a decline in daily activity, but maybe there won’t be as many NFTs traded on the Ethereum network. While not quite as big as the Merge, the Dencun upgrade constitutes a significant change to ETH; the first testnet fork should be announced soon. There’s still room for other changes to the network, and only time will tell what EIPs developers will include.

As far as the timing of the Dencun upgrade is concerned, it’s impossible to make a rough estimate until the scope is finalized. Ethereum is still below the $2000 level it reached in April this year, and median gas fees hit a 12-month high due to the resurgence of meme coins. The fast rise of the pepecoin (PEPE) has turned into profit, as those undeterred by the warnings transact on Ethereum, helping the network earn more money. As gas fees increase, more tokens are burnt, which translates into the fact that Ethereum is a deflationary asset. Analysts, nevertheless, are concerned about pepecoin ownership.