Ethereum Cancun Upgrade Explained

Summary: The upcoming Ethereum Cancun-Deneb upgrade, set for October 2023, is a significant leap towards improving the network's scalability and efficiency. Introducing Proto-Danksharding via EIP-4844, the upgrade promises reduced gas fees and faster transactions through the use of data "blobs". 

This is part of several enhancements aiming to optimize data storage, bolster security, and foster better cross-chain integrations, steering Ethereum closer to its goal of becoming a global transaction hub, particularly enhancing Layer 2 solutions.

What is Ethereum Cancun-Deneb (Dencun)?

Ethereum Cancun-Deneb, also known as Dencun, is the forthcoming upgrade to the Ethereum blockchain, slated for the second half of October 2023. This upgrade aims to enhance the network's scalability, security, and usability. A pivotal feature of this upgrade is the introduction of Proto-Danksharding, a transitional phase towards full Danksharding, which is expected to significantly reduce gas fees and increase transaction throughput by utilizing data 'blobs'. 

This upgrade lays the groundwork for future developments in the Ethereum network, moving it closer to becoming a fully scalable and accessible global transaction platform.

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Ethereum Cancun EIPs

The upcoming Ethereum Cancun-Deneb upgrade is divided into two parts: Deneb, focusing on the Consensus Layer (CL), and Cancun, targeting the Execution Layer (EL).

The Cancun segment includes five pivotal Ethereum Improvement Proposals (EIPs) according to anote provided by Ethereum core developer Tim Beiko, aimed at expanding data storage and reducing costs. These are:

1. EIP-4844 (Proto-Danksharding): Sets the stage for the full implementation of Danksharding, enhancing scalability.
2. EIP-1153: Lowers the cost of on-chain data storage, optimizing block space.
3. EIP-4788: Improves the structure of cross-chain bridges and stake pools.
4. EIP-5656: Introduces minor code changes to the Ethereum Virtual Machine (EVM).
5. EIP-6780: Removes SELFDESTRUCT, which is code that could potentially terminate smart contracts.

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What is EIP4844 and Proto Dansharding?

EIP-4844, or Proto-Danksharding, is a central component of the upcoming Ethereum Cancun upgrade. It serves as a transitional phase towards the full implementation of Danksharding, a process that aims to significantly enhance the scalability and transaction speed of the Ethereum network. By introducing a new type of transaction that accepts large data blobs, Proto-Danksharding is expected to reduce gas fees and increase transaction throughput, paving the way for a more scalable and efficient Ethereum network.

In Proto-Danksharding, "blobs" refer to Binary Large Objects, which are substantial data packets integrated into the Ethereum network to boost transaction throughput. These blobs contain additional information temporarily stored on the Ethereum consensus layer, facilitating a more cost-effective solution for reducing gas fees. 

By enhancing data availability and storage efficiency, blobs play a crucial role in the transition towards full Danksharding, promising a more scalable and accessible Ethereum network. This innovative approach is expected to be a game-changer in optimizing the network's performance, marking a significant step towards Ethereum's goal of becoming a global transaction platform.

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Key Benefits of Ethereum Cancun

The Ethereum Cancun upgrade is poised to bring substantial benefits to the network, including:

1. Boosted Scalability: The introduction of Proto-Danksharding will facilitate a higher volume of transactions, processed at a quicker pace, enhancing Layer 2 solutions which operate atop the main blockchain.
2. Reduced Gas Fees: Through the utilization of data "blobs" and the implementation of EIP-4844, the upgrade aims to significantly cut down the gas fees, a move that will be particularly beneficial for Layer 2 solutions, making transactions more affordable.
3. Strengthened Security: The network's security infrastructure will be fortified, safeguarding user data and investments, thanks to initiatives like EIP-6780.
4. Efficient Data Storage: EIP-1153 is set to optimize data storage on the blockchain, fostering more efficient and cost-effective operations, which is a boon for Layer 2 solutions that rely on optimal data management.
5. Enhanced Cross-Chain Connectivity: The upgrade, through EIP-4788, promises smoother and more secure interactions between different blockchain networks, facilitating better integration with Layer 2 solutions.
6. Technical Innovations: With minor code modifications introduced through EIP-5656, the upgrade sets the stage for future technical advancements, potentially spurring innovation in Layer 2 solutions.

Overall, the Cancun upgrade is set to make the Ethereum network more adaptable, secure, and user-friendly, bolstering its position in the cryptocurrency space and enhancing the functionality and efficiency of Layer 2 solutions.

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Bottom Line

The forthcoming Ethereum Cancun-Deneb upgrade, set to launch in late October 2023, marks a significant milestone in blockchain innovation. With the integration of Proto-Danksharding through EIP-4844, the Ethereum network is gearing up to enhance its scalability and efficiency substantially, promising users faster and more cost-effective transactions. 

his upgrade is more than just a technical enhancement; it's a pivotal step towards realizing Ethereum's vision of becoming a global and modular transaction hub, characterized by strengthened security and lower fee transactions on optimistic and ZK-based layer 2 rollups.