How does the Dencun update change Ethereum: A complete guide to the scalability revolution

Ethereum as a platform for smart contracts and decentralized applications (dApps) has entered a new era of development. The Dencun upgrade, scientifically named Ethereum Cancun-Deneb, marks a pivotal moment in enhancing network scalability and efficiency. At the core of this upgrade is EIP-4844, which introduces a revolutionary solution called Proto-Danksharding. But why is the crypto community so closely watching this upgrade? Let’s understand the essence of the Dencun update and its significance for all ecosystem participants.

What is Dencun: Scalability through Proto-Danksharding

The Dencun upgrade is named after the star Deneb in the Cygnus constellation and is a cornerstone of Ethereum 2.0’s roadmap. This comprehensive update affects two critical layers of the network: the data availability layer (via Cancun) and the consensus layer (via Deneb). The main goal is to radically improve scalability, security, and overall network performance.

The primary innovation of Dencun is the introduction of “blobs” — large data packets that significantly expand Ethereum’s data storage capabilities. This concept underpins Proto-Danksharding, which serves as an important intermediate step before full Danksharding implementation.

EIP-4844: The Key Innovation of Proto-Danksharding

EIP-4844 was specifically developed to optimize data availability and efficient storage. Instead of traditional data processing methods, this new mechanism introduces “blobs” — special data containers processed differently by the network. This solution was designed as a preparatory step ahead of full sharding implementation.

Simultaneously, a feature called State Expiry is introduced, which optimizes blockchain performance by systematically removing outdated data. This reduces network load and increases overall efficiency.

It is expected that the Dencun upgrade will significantly impact data availability layers (DA), such as Celestia, EigenDA, and Avail. These networks are critical for supporting Layer-2 solutions on Ethereum, providing scalable infrastructure. The implementation of Proto-Danksharding should reduce costs for data access and storage, improving the economic efficiency of these ecosystems.

Other Improvements: Additional EIPs in the Dencun Update

Besides EIP-4844, the Dencun upgrade includes five other important proposals:

EIP-1153 introduces transient opcodes for temporary data storage during smart contract execution, reducing gas fees and improving overall scalability.

EIP-4788 enhances the consensus layer by adding the fixation of the Beacon block root. This provides direct access to consensus-level information and improves operational efficiency.

EIP-5656 introduces the MCOPY opcode for more efficient memory copying during smart contract execution.

EIP-6493 makes changes to validator block selection mechanisms, improving finality and reducing centralization.

EIP-6780 limits the SELFDESTRUCT function in smart contracts, increasing network security and stability.

Deployment Schedule of the Dencun Update

The Dencun upgrade was deployed on the Ethereum mainnet on March 13, 2024. Prior testing was conducted on the Goerli (January 17), Sepolia (January 30), and Holesky (February 7) testnets. Originally, the upgrade was planned for Q4 2023 but was postponed following discussions among developers at the All Core Developer Consensus meeting in November 2023.

Real Impact: How Dencun Changes Fees

Dencun promises to transform fee structures both on Ethereum and Layer-2 networks. The focus is on EIP-4844, which aims to drastically reduce Layer-2 fees — potentially by 10 to 100 times compared to previous levels.

Before the upgrade, average transaction fees for transferring ETH were approximately $0.24 on Arbitrum, $0.47 on Optimism, and $0.78 on Polygon. For token swaps: $0.67, $0.92, and $2.85 respectively (according to L2fees data). These figures are expected to decrease thanks to the implementation of Proto-Danksharding.

The fee improvement mechanism works as follows:

Dencun increases transaction throughput through a more efficient architecture. Ethereum can process a higher volume of transactions under the same network load, naturally reducing fee pressure.

Proto-Danksharding enables more efficient data storage and processing, especially for Layer-2 solutions. Most Layer-2 fees are related to posting data on the main chain. The new mechanism makes this cheaper.

Layer-2 Transformation: How Second Layers Are Gaining New Life

According to Fidelity reports, Layer-2 networks accounted for about 10% of total Layer-1 fees at the time of the upgrade. It is expected that this share will significantly decrease after Dencun deployment, as Layer-2 solutions become even cheaper and more attractive.

Dencun impacts the Layer-2 ecosystem in several ways:

Lower transaction costs — improved interoperability between Layer-1 and Layer-2 makes moving assets between layers cheaper. This effect extends to all operations within Layer-2 networks.

Increased speed — enhanced mainnet efficiency allows Layer-2 solutions to complete transactions faster and at lower costs.

Security standardization — the update introduces new security protocols that also apply to Layer-2, creating a more stable and reliable infrastructure.

What Users Can Expect: Practical Changes

Dencun promises significant improvements for users. After deployment, Ethereum’s throughput is expected to increase from current 15 transactions per second (TPS) to an impressive 1000 TPS thanks to Proto-Danksharding.

For end users, this means:

Faster transactions — users will be able to perform operations with much lower latency, especially on Layer-2 networks.

Much lower fees — the main attraction of the update. Gas fees could decrease by dozens of times, making everyday transactions more accessible.

Expanded capabilities — the update will enable the creation of more complex decentralized applications that were previously economically unfeasible.

Strengthened ETH staking — the upgrade promotes the development of the liquid staking market, allowing users to earn rewards while maintaining liquidity of their assets.

For Developers: New Opportunities for Innovation

Developers gain significant advantages from Dencun:

More stable environment — increased throughput allows for building more ambitious applications and complex smart contracts without network overload concerns.

Expanded storage options — the “blobs” mechanism with 1 MB per slot capacity enables working with large data volumes that were previously economically impractical.

New use cases — improvements in transaction efficiency and compatibility open the door to entirely new types of applications requiring high throughput and low fees.

Ethereum’s Evolution Stages: Roadmap to the Future

Dencun is not the final point but an important step in Ethereum 2.0’s development. Key milestones include:

Beacon Chain (December 2020) — launched as the first step toward Ethereum 2.0, operating parallel to the mainnet with Proof of Stake.

The Merge (September 2022) — combined the mainnet with the Beacon Chain, transitioning to PoS consensus and reducing energy consumption by over 99.5%.

Shanghai/Capella (April 2023) — enabled users to withdraw staked ETH and rewards, encouraging mass staking.

Dencun (March 2024) — introduced Proto-Danksharding and scalability improvements.

Future: Petra and Danksharding — Ethereum community prepares for the next phase, known as Electra + Prague (Petra), which will include Verkle trees for further data storage efficiency.

From Proto-Danksharding to Full Danksharding

The Dencun update with Proto-Danksharding is a transitional phase. Full Danksharding, planned for the future, will divide Ethereum into multiple independent shards, each capable of processing transactions and smart contracts in parallel. This strategy promises to reduce network congestion and further lower transaction fees.

Proto-Danksharding serves as an essential preparatory step, laying the technological foundation and allowing the community to adapt to new mechanisms before full sharding deployment.

Potential Challenges and Risks

Despite its significant potential, the Dencun upgrade carries certain risks:

Technical complexities — any major blockchain upgrade can involve technical difficulties that may lead to vulnerabilities or instability.

Compatibility issues — transitioning to a new architecture might create interoperability problems with existing smart contracts and applications. Developers and users should be prepared to adapt.

Transition fluctuations in fees — initial periods may see temporary changes in fee structures as the network adjusts to new mechanisms. The actual impact depends on how quickly developers and users adopt the new features.

Conclusion: Ethereum on the Path to a New Era

The Dencun upgrade represents a critical milestone in Ethereum’s evolution. Its implementation of Proto-Danksharding and related improvements marks a new phase — an era of scalability and efficiency.

The Ethereum community eagerly watches the deployment results, and interest in its transformative potential continues to grow. The journey toward full Danksharding reflects Ethereum’s commitment to continuous improvement and innovation.

With each upgrade, from Dencun to future full Danksharding, Ethereum is confidently moving toward a more scalable, efficient, and user-oriented blockchain platform. The cryptocurrency market witnesses this evolutionary change, opening new opportunities for traders, investors, and developers within the Ethereum ecosystem.