Ethereum Dencun Upgrade: The Next Big Enhancing in Scalability
Background
With the much-anticipated completion of Merge and Shapella (Shanghai+Capella) Upgrades this April, Ethereum has successfully transitioned from POW to POS consensus.
The next major move on Ethereum’s development roadmap is EIP 4844, also known simply as “Proto-Danksharding”. Named after two core Ethereum developers “Protolambda” and Dankrad Feist, EIP 4844 introduces a new transaction type called “blobs”, which are designed to improve the scalability of roll-ups built on top of Ethereum. The proposal has been formally incorporated into Dencun, Ethereum’s next upgrade.
Dencun Upgrade
Dencun is the next major hard fork of Ethereum after Shapella this April, named by combining the words “Deneb” and “Cancun”, which means two simultaneous upgrades will be involved. “Deneb” represents the upgrade of the Consensus Layer (CL) the brightest star in the constellation Cygnus. “Cancun” is the name of the upgrade for the Execution Layer (EL) of Ethereum and is the host city of the Devcon 3 conference in 2017.
The Cancun Upgrade is currently finalized, and the exact scope of the Deneb Upgrade is still under discussions by core developers. There are two major conference series in the Ethereum community:
- ACDE (All Core Developers Execution) conference focuses on code changes to the Ethereum Execution Layer;
- ACDC (All Core Developers Consensus) conference focuses on coordinated discussions on changes to the Ethereum Consensus Layer.
Both of these two conference calls are held every two weeks and are an expression of the decentralized decision-making of the Ethereum community.
During the ACDE #163 conference call on June 8, the client team finalized the scope of the Cancun Upgrade (next EL upgrade). It will include five code changes. Alongside EIP 4844, the following four EIPs will be activated in Cancun as well: EIP 1153, EIP 4788, EIP 5656, and EIP 6780. A list of EIPs proposed for inclusion in Cancun and their status as of June 2023 is as follows:
- EIP 4844
EIP 4844 (aka. Proto-Danksharding) is a simple implementation of the full version of Danksharding. Proto-danksharding is intended to implement most of the logic and “scaffolding” (e.g., transaction formats, verification rules) that make up a full Danksharding spec. The main feature of EIP 4844 is the introduction of a new type of transaction called blob-carrying transaction. A blob-carrying transaction is like a regular transaction, except it also carries an extra piece of data called a blob. Blob allows each block to carry 1MB-2MB of data. In addition to introducing blob-carrying transactions, EIP 4844 will also implement execution-layer logic, verification rules, multi-dimensional fee markets, and other system changes required for full Danksharding in the future. Proto-danksharding will reduce the cost of publishing large amounts of data to Ethereum, thus reducing the operational costs of rollups. EIP 4844 is seen as a scalability enhancement to Ethereum as it makes the L2 network built on Ethereum more cost effective.
- EIP 1153
EIP 1153 introduces transient storage opcodes, which manipulate state that behaves identically to storage, except that transient storage is discarded after every transaction.
Transient storage is cheaper since it never requires disk access. This introduction may open up new use cases such as single transaction ERC-20 approvals, increasing block space availability, implementing reentrancy locks, and reducing the operational costs associated with on-chain storage.
- EIP 4788
Expose beacon chain block roots in EL block headers to allow proofs of CL state in the Ethereum Virtual Machine (EVM). It can make the communication between different protocols and applications in the Ethereum network more efficient and secure and will help improve the security of staking pools, restaking constructions, smart contract bridges, MEV protocols, and more.
- EIP 5656
EIP 5656 will introduce a new EVM instruction for efficient copying of memory areas, supporting more accurate copying of code, improving the performance of memory copies by about 10.5%, which will be useful for a variety of computationally intensive operations, and also be useful for compilers to generate more efficient and smaller byte-code, as well as saving some identity pre-compilation gas fee.
- EIP 6780
EIP 6780 allows the creation and deletion of contracts in a single transaction. This proposal enables the SELFDESTRUCT opcode to be deprecated with minimal impact on existing smart contracts. In an analysis of the impact of EIP 6780 during the ACDE conference in late May, blockchain security firm Dedaub noted that most dApps on Ethereum will be able to operate without modification when deploying EIP 6780.
The scope of the Deneb upgrade (i.e., CL Upgrade)has not yet been finalized. On June 15, During the latest ACDC (#111) meeting, hosted by Ethereum Foundation Researcher Alex Stokes, CL client teams discussed the final scope of the Deneb upgrade and plans to merge EIP 7044, EIP 7045 and EIP 4788 into the Deneb specification over the coming weeks.
- EIP 7044: A code change to improve the staking user experience. The EIP would ensure that signed validator exits are valid in perpetuity. The EIP proposed by Lodestar (CL) developer “Dapplion” has already been merged into Deneb specifications.
- EIP 7045: A code change to enhance chain security. The EIP would expand the attestation slot inclusion range from a rolling window of one epoch to two epochs. The EIP proposed by Ethereum Foundation researcher Danny Ryan is undergoing more discussion and a final review.
Given the complexity of the Dencun upgrade and the amount of time and work required to complete code testing and changes, the final timing of the upgrade has not yet been finalized. Similar to the process of determining the scope of the Shanghai upgrade, Ethereum core developers are prioritizing the activation of EIP 4844 as the primary code change into Cancun.
At one point, developer Alex Stokes suggested that a reasonable target date for activating the Cancun upgrade would be October 2023, given the current scope of upgrades already incorporated. Another developer, “lightclient”, also agreed that the upgrade would take at least another 5–6 months. All things considered, we can expect to see the deployment of Dencun activated by the end of 2023.
Impact of the Upgrade
The Dencun Upgrade is another important fork of Ethereum after the Shapella Upgrade, and is the beginning of “The Surge”, a new phase of the Roadmap proposed by Vitalik, following “The Merge”. The core issue of The Surge phase is to significantly improve the performance of Ethereum and reduce transaction costs by introducing technologies such as sharding and rollups to achieve this goal.
The core of Dencun’s upgrade is EIP 4844, which itself is called “Rollup-Centric Sharding Scheme”, and it is a pre-release of Danksharding, the ultimate sharding scheme for Ethereum.
EIP 4844 puts Ethereum on a path to meaningful scaling by modularizing and offloading transaction execution activity to other protocols. Since data does not need to be permanently stored by the blockchain, it will be cheaper to use than on-chain storage (such as CALLDATA currently used by rollups). Rollups (L2) can use this storage to post transaction data or proofs back to the Ethereum mainnet (L1), which reduces the costs of rollups and primarily benefits rollup users and operators.
In addition to EIP 4844, the already incorporated EIP 1153 and EIP 6780, as well as the five EIPs that may be incorporated into the upgrade in the future, also focus on reducing transaction costs (Gas), enhancing transaction communication security, improving developer experience and other improvements, all of which are good technical pavements for the future deployment of computationally intensive operations and the introduction of new large-scale features (such as account abstraction) in Ethereum.
Summary
From a comprehensive perspective, the successful upgrade of the Dencun is an important improvement to the fundamentals of Ethereum, which will make the Ethereum ecosystem more attractive in the long run and help consolidate its market position.
In addition, with the implementation of technical improvements such as EIP 4844 in the short term, it will bring significant performance improvements and decreasing transaction costs to the Ethereum, which will help spawn the birth of new use cases on the existing Layer2 infrastructure and stimulate the continued prosperity of Layer2 rollup projects led by Optimism and Arbitrum.
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