Dencun Upgrade Is Almost Here: What It Means For Ethereum

By Jody McDonald February 27, 2024 In Ethereum, Grayscale Investments
Source: Adobe Stock
  • Ethereum’s Dencun upgrade is expected to go live on March 13, introducing ‘proto-danksharding’ and potentially dramatically reducing gas fees.
  • Asset manager Grayscale said the upgrade would mark Ethereum’s “coming of age” and could spark a new era of renewed growth for the smart-contract platform.
  • Others argue the upgrade alone won’t be enough to solve the network’s scalability issues and that other multi-chain solutions must be implemented.

Ethereum’s much anticipated ‘Dencun’ upgrade is just around the corner and the hype is starting to build with asset manager Grayscale publishing a report claiming the upgrade marks Ethereum’s “coming of age”—allowing it to match the speed and scalability of the newer generation of blockchains such as Solana.

Not everyone is convinced that this upgrade is so significant. Naysayers pointed out this upgrade primarily optimises storage efficiency, and that additional solutions—such as roll-ups and app chains—will be required to fully address Ethereum’s speed and scalability issues.

What Will Dencun Do For Ethereum?

The Dencun upgrade, which is actually a combination of two separate upgrades—Deneb and Cancun—is expected to go live on mainnet on March 13, having already been successfully rolled out on several Ethereum test nets.

The biggest innovation in the upgrade is the introduction of proto-danksharding, which allows for data to be stored in what’s known as ‘blob format’, drastically improving storage efficiency and lowering gas fees by perhaps as much as 80-90%.

Image source: Grayscale report

The implementation of the Dencun upgrade marks the start of what Ethereum refers to as “The Surge” era, where the network aims to remove efficiency bottlenecks and achieve 10,000 transactions per second or better.

Ethereum Still In Adolescent Phase Says Grayscale

In terms of price action, ETH has underperformed in the past year compared to the broader crypto market, but Grayscale believes that’s because the network is still in its “adolescent phase”. 

This upgrade, Grayscale claims, will see the network move closer to full maturity. Grayscale believes that combined with continued growth in its layer-2 ecosystem, its first mover advantage, its strong revenue, and its reputation as the most secure smart-contract platform—along with the possible approval of spot ETFs this year—Ethereum is poised to enter a new era of significant growth.

Not Everyone Agrees On Significance Of Dencun

While important for storage efficiency, some have argued that in addition to the upgrade, to solve its scalability and speed issues Ethereum will need to focus on network capacity, essentially increasing its throughput. 

The way to do this, according to Nebojsa Urosevic, co-founder of Web3 research and development firm Tenderly, is to focus on implementing multi chain solutions such as rollups and appchains:

While both are useful on their own, using rollups and appchains can achieve a synergistic effect, combining the transaction efficiency of rollups with the flexibility and customization of appchains.

Nebojsa Urosevic, Co-founder of Tenderly

Jody McDonald

Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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