Source: Crypto Daily

Today marks Ethereum’s big day. A much-anticipated upgrade on the Ethereum network will go live in a few hours and the maxis are waiting to see how it goes.

What is this upgrade and why is it important? Read on…

Dencun Upgrade

Dencun is a portmanteau of two words: Deneb and Cancun.

Deneb represents changes or upgrades that happen on the Ethereum consensus layer. The consensus layer is the layer that facilitates agreement among the participating nodes on the state of the network.

Cancun refers to all changes or upgrades affecting the execution layer. The execution layer, as the name implies, is the layer responsible for executing transactions.

Dencun Upgrade is Ethereum’s latest and possibly greatest upgrade as it is set to achieve the long-life dream of true scalability, lower transaction fees (but not on the Ethereum blockchain itself. More on this soon), and efficiency. Dencun Upgrade is Ethereum’s attempt at introducing key improvement proposals that are intended to improve how transaction data is stored, increase throughput, and improve security. All of these and more are expected to happen with the new set of nine EIPs that the Dencun Upgrade will introduce, out of which EIP-4844 is deemed the most important.

Nine Ethereum Improvement Proposals (EIPs) the Dencun Upgrade is Introducing

EIP-1153 which requires changes to the consensus layer.

EIP-4788 which requires changes to the consensus and execution layer.

EIP-4844 which requires changes to the consensus and execution layer.

EIP-5656 which requires changes to the consensus layer.

EIP-6780 which requires changes to the consensus layer.

EIP-7044 which requires changes to the execution layer.

EIP-7045 which requires changes to the execution layer.

EIP-7514 which requires changes to the execution layer.

EIP-7516 which requires changes to the consensus layer.

An aggregation of these nine EIPs represents the Dencun Upgrade and is collectively under the EIP-7569.

The Holy Grail of the Dencun Upgrade: EIP-4844, Shard Blob Transactions

The most important and most anticipated feature of the Dencun Upgrade is the EIP-4844 which aims to introduce shard blob transactions. This EIP is popularly known as proto-danksharding.

In February 2022, Vitalik along with a group of six other contributors proposed a new transaction format for blob-carrying transactions that contain a large amount of data. This proposal was intended to be a stepping stone into full sharding. It was named after two of the contributors to the proposal - Proto Lambda and Dankrad Feist, along with the end goal - sharding. Hence, the name proto-danksharding.

What is Proto-danksharding? It is an introduction to a new type of transaction data storage called blobs which will be utilized by Ethereum layer 2s.

Typically, crypto transactions are stored in blocks permanently but with the implementation of proto-danksharding, layer 2s (rollups) will now store their transaction data in blobs which, although store large amounts of data, are cheaper and more space-preserving than blocks.

Ethereum relies on scaling solutions like rollups to improve its scalability and throughput. Thus, rollups (whether optimistic or zero-knowledge-based) have emerged over the past months as the answered prayers to Ethereum’s “deadly” gas fees. However, even with the reduction in gas fees that these rollups offer, they are still expensive when compared to other layer 1s like Solana.

A long-term solution to this, according to the EIP contributors, is data sharding which involves splitting the transactions into shards (which could be likened to parallelization) and allowing each shard to “fend” for itself but the realization of full sharding is still a very long way to go. Hence, the introduction of proto-danksharding which is more like a medium-term solution.

Proto-danksharding will implement blobs. Blobs are a type of transaction format that are similar to blocks because they are used to store crypto transactions but they differ from blocks in that they store these transactions only for a short time. The data carried by blobs is downloaded by the consensus nodes of the Ethereum mainnet where they are permanently stored, after which they can then be deleted by the blobs. A blob will store transactions for a minimum of one month to a maximum of three months. Since these blobs won’t carry around a piece of data for more than 3 months cap, it reduces the space these data occupy, thereby giving room for more transactions. Layer 2s (rollups) will also, along the way, be “tempted” to use blobs because of the cheaper fees they’ll provide (both for the developer and the users).

What This Means for Rollups

As it is presently done, rollups process transactions off the Ethereum chain but remain anchored to it. After processing multiple transactions, they bundle (roll) them and submit data relating to all the transactions to the Ethereum mainnet.

Rollups use “fraud proofs” for optimistic ones and “validity/ZK proofs” for ZK ones to prove the validity of the transactions that they submit to the main chain. The validators on the main chain can dispute the truth or falsity of the transactions and set a challenge for the rollup to solve. To tackle this challenge, these rollups would need data that is only available on the mainnet. This data which is only available on the mainnet is a limiting factor because it causes delay which leads to an increased gas fee. However, if the data is stored in blobs, they’ll be readily available, at least long enough for the rollups to prove the validity of the transactions.

When is the Dencun Upgrade Coming to Live?

Dencun Upgrade is going to happen today (13th of March, 2024) at exactly 13:55:35 UTC.

You can even watch it happen live at https://www.ethernow.xyz/

What Do I Have to do as an Ethereum or Layer 2 User?

Absolutely nothing! Nothing changes for you. You get to interact with Ethereum and the other layer 2s the same way you have been doing. With time and adoption from layer 2s, you should expect a reduction in the gas fees you pay for transactions.

Disclaimer:

Dencun Upgrade will not reduce gas fees on the Ethereum mainnet. It will only reduce gas fees on rollups as these blobs will be utilized by rollups as a transaction format but won’t be utilized by Ethereum itself. Let’s just say the Ethereum blockchain’s expensive gas fee is “irredeemable” and its focus is on rollups as they are seen as the “only trustless scaling solution for Ethereum.”

Fun Fact:

The names of Ethereum upgrades are mainly portmanteaus of two words. One of these two words (the one that usually represents changes to the consensus layer) is derived from the name of a star; while the other (the one that usually represents changes to the execution layer) is derived from the name of the cities that have hosted Devcon conferences in the past.

For instance, Shapella Upgrade was derived from “Shanghai” (the city where the Devcon 2 conference was held) and “Capella” (a star in the Northern constellation of Auriga).

Dencun Upgrade was derived from “Deneb” (the name of the first-magnitude star in the constellation of Cygnus) and “Cancun” (the city where the Devcon 3 was held).