Ethereum users are preparing for the much-anticipated Dencun upgrade, a significant update to the blockchain expected to impact Ethereum fees. Scheduled to commence in less than two hours, Dencun combines the project names Deneb and Cancun, bringing simultaneous upgrades to Ethereum’s consensus and execution layers.
The hard fork aims to usher in a new era of reduced fees for Ethereum Layer 2 (L2) rollups, particularly benefiting networks like Arbitrum, Optimism, and Polygon. The introduction of a new Ethereum Improvement Proposal (EIP) called “proto-danksharding” or EIP-4844 is also part of the upgrade, enhancing the chain’s capacity to handle data from L2 networks.
While elements of the Dencun upgrade have been in development for years, its implementation was postponed from the original target of late 2023 due to engineering concerns. The upgrade underwent rigorous testing on three separate test networks, with successful results in the majority of tests.
Dencun marks Ethereum’s most substantial update since the Shapella upgrade in April 2023, introducing significant code changes such as “proto-danksharding” to enhance data storage on Ethereum. L2 networks like Arbitrum, Optimism, and Polygon are expected to benefit the most from Dencun, as it enables more efficient settlement of data and reduces fees for end-users.
Additionally, the introduction of EIP-4844 benefits data availability (DA) layers within the Ethereum ecosystem, lowering costs associated with downloading DA data. Following the Dencun upgrade, Ethereum developers will focus on the next upgrade, named Electra + Prague (Petra), with potential enhancements such as Verkle Trees to improve node storage capabilities.
The Dencun upgrade is anticipated to significantly reduce Ethereum fees, with token swaps on L2 networks like Optimism expected to experience over a 96% drop in costs. Ethereum analysts are optimistic about the impact of the upgrade on Ethereum’s price, with expectations of further price appreciation in the near future.