Following the upcoming Shanghai upgrade scheduled for April 2024, the next important milestone in Ethereum is the Cancun-Deneb upgrade, frequently referred to as Dencun, which aims to increase scalability and security, and lower fees for Ethereum L2 users. The upgrade will contain changes on both the consensus layer (the Cancun upgrade) and the execution layer (the Deneb upgrade). 

What is the Cancun-Deneb (Dencun) upgrade?

The Dencun upgrade described under EIP-7569 will bring about an entire set of changes to Ethereum’s consensus and execution layers. With a core focus on bolstering scalability, enhancing security measures, and refining usability, this upgrade is a significant leap forward for the network.

Central to the Dencun upgrade is the introduction of Proto-Danksharding, a pioneering concept poised to lay the groundwork for the eventual integration of full Danksharding. By leveraging data ‘blobs’, Proto-Danksharding is poised to play a vital role in reducing transaction costs and expanding transaction processing capabilities.

These advancements serve as critical building blocks for the future of Ethereum’s ecosystem. They not only signify progress towards Ethereum’s overarching objective of establishing a scalable, decentralized, and globally accessible settlement layer but also set the stage for further enhancements yet to come.

List of changes 

• EIP-1153: This proposal presents new transient storage opcodes, which handle data in a manner akin to storage but with the distinction that transient storage is reset after each transaction. Put simply, transient storage values are neither retrieved nor saved in the persistent storage, making it a cost-effective option as it bypasses disk access altogether.
• EIP-4788: This proposal’s aim is for users to be able to commit to the hash tree root of each beacon chain block in the corresponding execution payload header. Each of these roots will be stored in a smart contract.
• EIP-4844: This proposal introduces a new transaction format for “blob-carrying transactions”. This type of transaction contains a large amount of data whose commitment can be accessed, but that cannot be accessed by EVM execution. The new format aims to be fully compatible with the format that will be used in full sharding.
• EIP-5656: This proposal intends to provide efficient EVM instruction for copying memory areas.
• EIP-6780: This proposal changes the functionality of the SELFDESTRUCT opcode. The new functionality will only be to send all Ether in the account to the target, the only exception being that the current behavior is preserved when the command is called in the same transaction a contract was created.
• EIP-7044: Lock validator voluntary exit signature domain on Capella for perpetual validity. Currently, signed voluntary exits are only valid for two upgrades.
• EIP-7045: This proposal increases the max attestation inclusion slot. This increase is critical to the current LMD-GHOST security analysis as well as the confirmation rule.
• EIP-7514: This proposal intends to update the maximum validator growth rate from an exponential to a linear increase. This is achievable by capping the epoch churn limit.
• EIP-7516: This proposal adds a BLOBBASEFEE (0x4a) instruction that returns the value of the blob base-fee of the current block it is executing in.

Main Benefits

Enhanced scalability

The implementation of Proto-Danksharding in the Dencun upgrade aims to increase transaction processing speeds and volumes on the Ethereum network. By introducing temporary storage space, particularly beneficial for Layer 2 solutions, Dencun seeks to elevate the network’s capacity to sustain higher transactional volumes per second, fostering scalability.

Gas fee reduction

Through the incorporation of data “blobs” and the activation of EIP-4844, the upgrade aims to significantly reduce gas fees per transaction. These “blobs” will be introduced as blob-carrying transactions through proto-danksharding, acting as cost-effective supplements to Ethereum transactions by including additional information, making them more economical, particularly benefiting Layer 2 solutions.

Security improvements

The security enhancements introduced through initiatives like EIP-6780 within the Dencun upgrade aim to fortify the Ethereum network’s defenses, mitigating risks and bolstering protections for user data and investments by disempowering the SELFDESTRUCT code, thereby limiting the termination of smart contracts and enhancing safeguarding measures.

Better data storage

The implementation of EIP-1153 in the upgrade will optimize blockchain data storage on the Ethereum network, resulting in more efficient operations, reduced costs, and improved utilization of block space. This enhancement will particularly benefit Layer 2 solutions, which rely on streamlined data management within the Ethereum ecosystem.

Improved cross-chain communication

EIP-4788, integrated into the Dencun upgrade, not only enhances cross-blockchain interactions for improved interoperability with Layer 2 solutions but also enables seamless and secure interactions between various blockchain networks. This upgrade strengthens cross-chain bridges and stake pools, thereby fortifying the bridge that facilitates communication between different networks and Layer 2 solutions.

Conclusion

The Ethereum Cancun-Deneb (Dencun) upgrade is set to bring further enhancements to the Ethereum network’s architecture by implementing Proto-Danksharding and an array of critical EIPs. 

The upgrade represents a significant step forward in enhancing the scalability, security, and efficiency of the network, potentially catalyzing widespread adoption and advancing the broader cryptocurrency ecosystem.

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