Ethereum’s roadmap has a long way to go until it reaches completion, but since updates were introduced, the network evolved considerably. From the Constantinople update that introduced state channels for improved scalability to the latest Shanghai improvement that allowed validator withdrawals, the roadmap addressed so many issues on the blockchain in such a short time.
Still, we’re not even in the middle of the roadmap’s development. After the prominent Merge upgrade, others will follow, such as the Surge dealing with sharding, the Verge improving gas prices, the Purge deleting technical debt, and the Splurge handling everything else. During their introduction, Ethereum will experience considerable changes in value, so the time to buy Ethereum with bank transfer is now.
The following upgrade in the map is the Dencun hard fork, one of the most expected in 2024. Here’s why it’s so important.
What is the Dencun update about?
Dencun is a mix of fixtures involving the execution layer (Cancun) and Ethereum’s consensus layer (Deneb), two critical parts of the blockchain that operate data validation and attesting new blocks over the network. Together, the Dencun solution will improve scalability and security.
Regarding Cancun, the execution layer will add a few EIPs to adjust the block reward and optimize gas efficiency. On the other hand, the consensus Deneb will strengthen security and update the PoS consensus algorithm that was introduced in 2022 to Ethereum, which was
Initially using PoW.
The new Ethereum Improvement Proposals will change the fee structure, stabilize a system to deter potential attacks and make contract verification more efficient.
How will Dencun improve the network?
Ethereum has already improved significantly, but Dencun will prepare the system through increased security for the following upgrades. The consensus and user application will benefit from optimized functionalities, while the staking experience will be superior.
After staking was improved by the Merge update, Ethereum’s energy consumption decreased by 99.9%, liquid staking boomed, and the net supply of the cryptocurrency decreased, which may indicate more demand. However, the Merge was followed by centralization fears over staking, an issue that Dencun and upcoming fixtures will slowly address.
Finally, Dencun will make the network cost-efficient by adding new codes through which gas is optimized, smart contracts will leverage zero trade-offs, and storage will be expanded for complex transactions to be better handled.
Proto-Danksharding―the most awaited update part
Besides the numerous benefits of Dencun, the upgrade brings something new to the blockchain. This advanced technology delivers the update from danksharding to proto-danksharding, which is vital for Ethereum to mitigate scaling efficiency.
Until now, Ethereum used danksharding for the blockchain to be divided into smaller parts that would make scalability easier to implement. However, the network is constantly expanding, and maintaining security and efficiency can be complex, which is why proto-danksharding will help extend the storage capacity and reduce gas fees for users.
Three stages for Dencun preparations
For the update to be correctly introduced, there’s a public test net timeline provided by developers that will have three stages― Goerli, Sepolia and Holesky, after which the update should be launched in mid-March, depending on the implementation progress. These stages involve adding several EIPs to help the mainnet pile-up updates properly.
Considering the challenges developers encountered, it may be possible for the date to be delayed. For example, a bug in the Prysm client led to a network split at the beginning of the project, slowing it down. Initially, the Dencun update was set to occur at the end of 2023 but is now expected to be functional around March 2024.
Pralectra will follow Dencun
As the Dencun update is already here, we’re waiting for the next improvement. The upgrade is called Pralectra (Prague-Electra) and is part of the Verge update. Still, its importance is already discussed as it will deal with Verkle Trees, an essential data structure to be introduced in the execution layer.
If Verkle Trees are brought to the blockchain, nodes won’t have to store large amounts of data on the network anymore while validating blocks. Therefore, they will introduce the feature of statelessness into the blockchain, an element that will take validating to the next level.
The update will also mitigate state bloats, which are long-term issues that might not be apparent but affect the network in regard to performance and scalability. Blockchains use this state term to point to the current information stored in full nodes that allow validation. However, state bloats happen when storage is overwhelmed by the amount of data, making blockchains slow and unsafe.
Besides Pralectra, developers tried various other ways to handle state bloats, such as removing old data or sharding-dividing, but stateless clients might be the correct solution.
2024 is an important year for crypto
Many events will take place in 2024 in regard to the cryptocurrency industry, so investors, developers and miners must change their approach and be wary of sudden changes. That’s because the Ethereum price might experience fluctuations due to the update, which has happened after the Merge, too.
At the same time, the market might be influenced by the Bitcoin halving, set to happen around April 2024, when the mining reward will decrease again, leaving miners with less output and more need for input.
Finally, the regulation issue might be challenging for most crypto businesses, exchanges and users since they’ll have to adapt to new laws on taxation, buying and selling crypto. Considering many users are still waiting for the green flag for spot ETFs, the market might be shaken by sudden regulatory framework changes.
Bottom line
Ethereum has been on a roll recently, especially since the following update will be prominent to the blockchain. The Dencun update is set to improve security, the block reward and gas fees, but also handle the PoS consensus mechanism to provide high efficiency.
The Settlement for the Dencun update involves many development stages, as it will alter Ethereum’s consensus and execution layer. Still, developers are taking it slow since they’ve been challenged by system bugs that delayed the update.
