What is the Ethereum Dencun update, and why is it important?

Ethereum Cancun-Deneb (Denkun) upgrade, explained

Denkun, an amalgamation of two different modifications – Deneb and Cancun – handles both Ethereum's consensus and execution layers in a single modification.

Technically a hard fork in blockchain terminology, the update rolled out at Ethereum epoch 269,568 at 1:55 pm UTC and ended at 2:10 pm. The upgrade is designed to significantly reduce transaction fees for Layer-2 solutions and increase Ethereum's scalability.

The purpose of Deneb's update is to add a layer of consensus that governs how network participants agree on the state of the blockchain. On the other hand, Cancun improves the way transactions are managed and executed at the execution layer. The Denkun upgrade came nearly a year after the April 2023 Shanghai upgrade, which allowed Ether (ETH) holders to withdraw ETH that had been locked in the network.

Bergen gas payments on Ethereum required remedial actions on the part of Ethereum developers. While Layer-2 solutions offer Ethereum a path to scalability by processing transactions off the main chain, the cost of gas on L2 solutions remains a barrier to widespread adoption.

Denkun unveiled proto-danksharding, which uses L2 networks like Polygon, Arbitrum, and Optimism, among others. Denkun's key feature, Proto-DunkSharding, focuses on making Layer-2 transactions significantly cheaper, paving the way for massive scalability improvements on Ethereum. It should also be noted that shard chains are not part of the Ethereum roadmap.

Proto-danksharding, a stepping stone to full danksharding, allows layer-2 solutions on Ethereum to store large amounts of transaction data off-chain – like in a temporary storage locker – reducing fees for users on L2 solutions and freeing up the main Ethereum network for important transactions. .

What is EIP-4844 (proto-danksharding)?

Proto-dunksharding, introduced to databases via Ethereum Improvement Proposal (EIP)-4844, is the most prominent feature of the update.

Data Blob is a new solution intended to improve the efficiency of L2 transaction data storage. Currently, L2 solutions use transaction call data, the update replaces it with blob data. Calldata stores some transaction data on-chain, requiring it to be kept by nodes forever, which greatly increases the burden on validators.

Proto-danksharding is a novel technique that overcomes the limitations of existing on-chain data storage systems, opening up a highly efficient data management system. By using data blobs designed to manage large amounts of data outside of the Ethereum blockchain, scrolls benefit from a more scalable data store.

The new batch transaction storage method is expected to significantly reduce the amount of data on Ethereum nodes. Reduces network congestion and optimizes network size for better performance. In addition, lower gas prices increase the utilization and efficiency of L2 applications. Additionally, as blobs are truncated after two weeks, Ethereum validator nodes can optimize disk space usage.

EIP-4844 also introduces cryptographic tools such as the KZG commitment scheme. These tools ensure that off-chain data stored in blobs is effectively verified (without actually revealing the data) while maintaining the security of the network.

The importance of upgrading the Ethereum wallet

Although the price of Ether dropped following the update, Denkun is considered a major step forward in solving Ethereum's expansion issues.

Denkun paves the way for a more affordable and accessible Ethereum ecosystem. There are various reasons behind why it is important, including:

Reduced fees on layer-2 solutions

Denkun introduced a layer-2 scaling solution based on Ethereum that reduces transaction fees. These layer-2 networks aggregate transactions to reduce costs before transferring them to the main Ethereum blockchain. Denkun Proto-DunkSharding, a core feature of EIP-4844, reduces the cost of Layer-2s by enabling certain transaction data to be off-chain.

A stepping stone to Danksharding

Denkun's proto-danksharding introduces the concepts necessary for full danksharding, the ultimate sharding solution for Ethereum, although it does not implement sharding itself. As mentioned, it introduces “blob transactions” off-chain storage to handle large amounts of data and reduce fees. Additionally, cryptographic schemes allow for efficient authentication of this off-chain data.

Moreover, Denkun implements payment reduction algorithms for layer-2 solutions, which are important for payment handling later in shards. Ultimately, it lays the groundwork for a future where marketing data and process will diverge.

Able to increase competitive edge and adoption

With significantly lower transaction fees, layer-2 solutions on Ethereum will become more attractive to users, which could lead to wider adoption of Ethereum for various applications, such as non-fungible tokens (NFTs) and decentralized finance (DeFi). Additionally, reduced fees on layer-2 solutions show how Ethereum is constantly evolving and helps it stay competitive with other blockchains.

Improved developer experience

Denkun simplifies mutual agreement processes and transaction management. As a result, developers may find it easier to create and implement decentralized applications (DApps) on Ethereum. A more seamless development process can encourage more innovative projects on the Ethereum network.

Improved security through EIP-4788 and EIP-6780

Although security improvements are not the primary focus of Denkun's update, it does include a number of improvements to improve Ethereum's security posture. One aspect of Denkun includes the EIP-4788, which acts as a communication link between Ethereum's consensus layer, where validators maintain the network, and the execution layer, where transactions are executed. When there is strong communication between these layers, it can be more challenging for attackers to exploit weaknesses in both layers.

EIP-6780, also part of Denkun, changes how smart contracts' “SELFDESTRUCT” function works. Because of this behavior, a smart contract can practically destroy itself. By making it more difficult for attackers to abuse this feature for nefarious purposes, the update could increase the overall security of Ethereum smart contracts.

How Ethereum's Denkun Update Will Benefit Users and Developers

Denkun's update represents a major development for the Ethereum ecosystem, benefiting both users and developers.

Proto-dunksharding reduces costs for Ethereum-based layer-2 scaling solutions, providing users with a more cost-effective experience, especially when using NFTs and DeFi services.

Layer-2 solutions aggregate transactions before sending them to the main Ethereum blockchain, and allow Denkun to keep some transaction information off-chain to save costs.

Denkun streamlines transaction management and communication mechanisms for developers, which translates into a smoother development experience, making it easier and faster to build and deploy DApps on Ethereum. An improved developer experience will unlock a wave of innovative projects, further enriching the Ethereum ecosystem.

In addition to its immediate benefits, Dankun sets the stage for further developments by introducing critical concepts for full Danksharding (as described above), which is an ideal way to solve Ethereum's scalability problems.

Sharding essentially divides the Ethereum blockchain into smaller chunks, allowing transactions to be processed in parallel and greatly increasing transaction volume. Basically, Denkun makes Ethereum a truly scalable and user-friendly platform, closer to wider adoption and a brighter future.

Ethereum's Roadmap to Full Dansharding

Ethereum's roadmap is an integrated approach to full denksharding, with Denkun being an important first step. The following milestones include building on the concepts presented by Proto-Danksharding.

Developers focus on innovations that simplify block production, such as proponent-developer separation. Some validators also work on data availability solutions, ensuring that data off-chain can still be verified if it goes offline. Finally, a complete dunksharding system divides the Ethereum blockchain into shards, each containing a separate set of transactions. This parallelism makes large-scale expansion possible.

The next Ethereum road map is the upgrade of Petra, integrating Prag and Electron. While specifics are still being discussed, possible features include Verkle trees for efficient data storage and, per “The Verge,” to simplify block verification. This focus on scalability paves the way for user-friendly Ethereum.

The exact time for complete danksharding is not known; Estimates range from a few years to ten years. Nevertheless, Denkun's successful implementation demonstrates the Ethereum community's commitment to continued development. Like Denkun, each milestone in its journey offers advancements and paves the way for a scalable and future-proof Ethereum.