Bankless: What is the Dencun upgrade? What are the standout features?

Author: David, Bankless; Compiler: Songxue, Golden Finance

The shift in cryptocurrencies in recent months seems to have made Ethereum a contrarian bet.

But now is the perfect time to be bullish on ETH. The Dencun upgrade is coming and will be a game changer, pushing the network closer to a scalable future. Rollups, validators, and the overall security of the network will all be upgraded—significantly strengthening Ethereum’s overall operating landscape.

ETH’s huge dominance this month can be attributed to a variety of factors, including speculation surrounding a spot Ethereum ETF, but it also reflects a deeper recognition of Ethereum’s enduring suitability. Dencun is not just another incremental update, but a key step in Ethereum’s strategy to solidify its dominance.

Here's what you need to know.

What is the Ethereum Dencun upgrade?

The core of Dencun (also known as Cancun-Deneb) is the introduction of Blob bearer transactions through Ethereum Improved Protocol 4844 (EIP-4844). This upgrade aims to significantly reduce L2 costs, lay the foundation for expansion, and Have a significant impact on Ethereum.

Blobs vs. Blocks: Blocks will now reserve space for Blob transactions—transactions that specifically hold L2 data. These data will be offloaded directly to the consensus layer, potentially reducing Layer 2 costs by more than 10 times.

If Ethereum is a highway, then Dencun has opened a fast lane. It leads us to a future where scalability is no longer a bottleneck.

Layer 2 Economics:EIP-4844 will nearly triple Layer 2 operating margins from 35% to 86-95%. This is not only good news for the platform; This is also a win for users. The reduction in Layer 2 costs reduces our transaction costs while potentially providing the network with more capital to run more growth businesses.

Imagine a future where L2 encourages adoption by sharing transaction revenue with users or using the money to support incentive programs.

From Surge to Scourge: The third key element of Dencun is setting the stage. Since Dencun marks the official start of Ethereum’s second scaling-focused phase, “Surge,” attention can now turn to the next phase, “Scourge.”

Recently, Vitalik shared an updated roadmap for Ethereum, which shows Scourge's shift in goals to directly combat PoS centralization, which will only become more important as Ethereum enters the restake era.

What else does Dencun do?

While EIP-4844 is Dencun’s standout feature, it’s not the only one! Dencun includes 9 EIPs that enhance everything from security to the staking experience. These include:

EIP 4788 and 6780 = Greater Security:EIP-4788 integrates native oracles into Ethereum, enhancing the accuracy of cross-layer data synchronization . EIP-6780 overhauls the SELFDESTRUCT function in smart contracts to enable safer code deletion.

EIP 7044 and 7045 = Better staking experience: These EIPs enhance staking reliability and extend the validator’s proof submission window. These upgrades make the process more convenient and increase the chances of validators participating in the consensus and receiving block rewards.

EIP-1153 = Transaction Long Data Storage: EIP-1153 introduces temporary storage to Ethereum, allowing temporary data storage during transactions. Think of it as a temporary workspace that is created at the beginning of a transaction and cleared when it completes. This reduces costs and increases efficiency in complex transactions.

Additionally, there are rumors of increasing gas limits, a move that Vitalik said could happen even without Dencun now. This will allow for more transactions per block, potentially easing congestion and lowering fees. As Dencun prepares for Ethereum rollup, it makes sense to revive the discussion around this.

Summary

Dencun marks another major turning point for Ethereum.

EIP-4844 and its blob-carrying transactions are more than just a technology upgrade. It positions Ethereum as the response to parallel EVMs, monolithic chains - laying the foundation for hundreds of chains to run efficiently on the network.

But Dencun’s story extends beyond the scope of EIP-4844. From security enhancements to an improved staking experience and transient data storage, every component of Dencun pushes the world computer closer to its vision of all cryptocurrencies acting like a solar system orbiting the Ethereum sun.

Dencun is a testament to hard work, vision and patient execution. This reminds us that Ethereum doesn’t just compete, it leads the way. The analogy of the tortoise and the hare is apt here. While there are a lot of rabbits out there, we all know who wins the race.