[TL；DR]:
The core of the Dencun upgrade is EIP-4844, which mainly reduces user costs through temporary storage and retrieval of off-chain data, further improving the scalability and efficiency of Ethereum.
The testnet will be launched again on September 29th. If it can be successfully launched, the upgrade plan may proceed as scheduled, but of course, everything is facing variables.
The Dencun upgrade benefits Ethereum, the L2 protocol, and its applications, which will consolidate Ethereum's leading position in the public chain field.
It is recommended to cautiously pursue hot topics, do a good job in risk control, and maintain the concept of "calmly observing the market and warmly embracing the future" to participate in investment.
Introduction
In the aftermath of this year's bear market, the main focus of the market is on the application of spot Bitcoin ETFs and Ethereum’s Dencun upgrade. However, recent rumors of delayed Dencun upgrade and the inclusion of EIP-7514 in the scope of the Dencun upgrade have sparked widespread discussions in the community.
This article will share the background of the Dencun upgrade and the potential investment opportunities it may bring. Of course, the important thing is still DYOR.
Why May the Dencun Upgrade Lead the Market Trend?
Since the transfer of POW to POS, Ethereum completed the Shanghai upgrade in April this year, with the main task of achieving free access to Ethereum staking, which has driven the popularity of the LSDFi sector. The next step is to address the issues of network performance and high fees. The Dencun upgrade is the latest solution for this, which will effectively improve the transaction processing speed of the Ethereum main chain and significantly save gas, providing technical support for its large-scale adoption.
The most important Dencun upgrade is the EIP-4844 upgrade, which introduces Proto-Danksharding (data sharding) and adds a new TX type blob TX specifically designed to store L2 Rollup to the Ethereum mainnet Beacon chain consensus layer. After storing the blob there for 3 weeks, it is discarded to decentralized storage networks such as IPFS or Web3 data service providers such as Alchemy. The storage space of a single blob is 128KB, and EIP-4844 was initially set to have 4 blobs attached to one block, which will be expanded to 64 in the future. Source: Online Public Information
Simply put, it means allowing L2 to no longer transmit trading data to the city center of Calldata, which is a land and treasure trove, but instead to the high tech development zone (Blob district), which will significantly reduce gas fees and improve throughput.
In addition to the core EIP-4844, there are several other important actions for this upgrade:
EIP-1153: Reduce on-chain data storage costs and optimize block space.
EIP-4788: Improve the structure of cross-chain bridges and staking pools.
EIP-5656: Minor code modifications to Ethereum Virtual Machine (EVM).
EIP-6780: Removing SELFDESTRUCT may terminate the smart contract.
Overall, this upgrade mainly aims to reduce the cost of data transmission through temporary storage and retrieval of off-chain data, further improving the scalability and efficiency of Ethereum. However, on September 16th of this year, the Ethereum new testnet Holesky was not successfully launched. The latest confirmation was that it would restart on Thursday, September 28th this year. The scheduled process for the Dencun upgrade has been disrupted, and whether it will be delayed until next year still needs to wait for official news. However, from past history, Ethereum upgrades have often been delayed, which does not hinder market speculation in positive sectors.
What Sectors May be Impacted by the Dencun Upgrade?
The first is Ethereum. The Dencun upgrade will significantly reduce user fees, enhance the scalability and security of the Ethereum network, prepare for Ethereum's future scalability, and consolidate its leading position in the public chain field.
Then there is the L2 protocol. The Dencun upgrade mainly aims to significantly reduce the interaction gas fees between L2 and accelerate the final confirmation speed of Tx, which will clearly give L2 a more competitive advantage compared to other L1, especially OP and ARB, which are TVLs and Rollup series projects with high network activity at the forefront of the public chain.
The Dencun upgrade will also benefit many ecological projects of the L2 protocol, especially the DAPP that was limited to high costs and unable to achieve large-scale growth in the past. Once the Dencun upgrade is successful, the growth potential of derivatives such as on-chain futures and options will be unleashed, and the improvement of capital efficiency will undoubtedly help more projects leave the market.
Some cross-chain bridge projects will benefit from the EIP-4788 upgrade, which will also bring a reduction in gas fees and cross-chain security. Many protocols that focus on cross-chain bridges may increase revenue, which in turn will increase the value of tokens.
In addition, the benefits of this upgrade may also spread to sectors such as decentralized storage, Gamble, and Game. However, the market advantages of some L1 models that primarily focus on high TPS may be further weakened, and they urgently need new technological innovation solutions and products to cope with the increasingly powerful network effects of Ethereum.
Focus on Upgrade Trends and Make Investment Plans Well
As a new measure with an impact no less than that of the Shanghai upgrade, the Dencun upgrade will finally make substantial improvements in saving gas and accelerating confirmation time. This series of technological upgrades aimed at improving network performance and security will also remove the nickname "aristocratic chain" from Ethereum, making it more civilian and efficient, and playing an important role in promoting the future development of the Ethereum ecosystem.
Of course, this upgrade also faces some challenges and discussions, especially the failure of the testnet, which has raised concerns in the community about the upgrade delay. Of course, if the test network can be successfully launched on September 28 and the Dencun upgrade is successfully released in Holesky in October, then the plan may still proceed as scheduled. What we are currently seeing is that the Ethereum community and development team are still actively seeking solutions and answering market doubts on social media to ensure the smooth progress of this upgrade.
Although this upgrade faces some twists and turns, the potential benefits brought by the upgrade have already begun to spread in the market. Against the backdrop of a slightly sluggish funding situation, hot sectors rotate rapidly and short-term trends often lead to early overdrafts of long-term value. We suggest that everyone be cautious in pursuing hot topics, do a good job in risk control, and maintain the concept of "calmly observing the market and enthusiastically embracing the future" to participate in investment. The important thing is still to remain DYOR.
Introduction
Why May the Dencun Upgrade Lead the Market Trend?
What Sectors May be Impacted by the Dencun Upgrade?
Focus on Upgrade Trends and Make Investment Plans Well
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