Ethereum’s Dencun Upgrade: The Real-World Breakdown

About a year after the Shanghai upgrade in April 2023, it’s time for another significant step in the Ethereum network’s evolution – the game-changing Cancun-Deneb upgrade, lovingly dubbed Dencun. Nexo’s Head of Blockchain Niki Angelov recently shined light on the significance of this upgrade, underscoring its potential.

This huge upgrade, encompassing both consensus and execution layers, is set to revolutionize Ethereum's scalability, security, and user experience. At its heart lies Proto-Danksharding, a tongue-twisting yet groundbreaking concept that is about to slash fees and turbocharge transaction processing.

Everybody agrees on the importance of the upgrade but few can explain it in real-world terms.If you think that most materials on Dencun sound madly technical and unfathomably complex, you’ve come to the right place. The Nexo team has made it easy to understand the operators’ Dencun announcement, comparing it to daily life situations, and we are laying open the challenges and solutions of the upgrade in simple terms.

In a nutshell, Dencun is addressing inefficiencies in the Ethereum network’s data storage and processing, but its positive effects are bound to impact the entire ecosystem. Why? Because more efficient data storage means cheaper and faster transactions. If successful, the upgrade will guarantee cost-efficiency and speed, and as such Dencun holds the potential to onboard even more digital asset entrepreneurs in addition to the thousands of protocols currently running on top of Ethereum.

Now that we have established the “Why,” let’s dive into each of Dencun’s Ethereum Improvement Proposals to see “How”:

EIP-7514: "The Gatekeeper"

A vigilant guardian to control the smooth flow of validators into the Ethereum network

• Ethereum EIP-7514, aka The Gatekeeper, manages validator influx by capping new additions at eight per interval. This prevents network congestion and ensures smoother operations as Sade would say. Imagine Ethereum as a bustling party where everyone wants to be a validator – the guardians of the network. But too many guests can clog the dance floor and slow down the music!
• So, this proposal throws on a velvet rope, allowing only eight new validators to join the party at a time. By keeping the guest list in check, it ensures the party stays lit without turning into a chaotic mosh pit, all while setting the stage for even bigger bashes in the future! 🎉

EIP-1153: "The Memory Magician"

A wizard-like character who introduces transient storage to Ethereum's Virtual Machine to optimize memory usage and reduce gas costs.

• Ethereum EIP-1153 introduces transient storage, reminiscent of a computer's RAM, facilitating efficient communication between transaction components and reducing costs. Picture Ethereum as a busy kitchen where transactions are cooking up a storm. But instead of pots and pans, they're juggling data, and it's getting messy!
• Enter transient storage, like a magical pantry where ingredients disappear when they're not needed anymore. With TLOAD and TSTORE commands, transactions can now talk to each other more efficiently, like chefs passing ingredients with lightning speed. By cleaning up the kitchen and making transactions smoother, Ethereum's cooking up a recipe for better scalability and fewer burnt transactions! 🍳

EIP-4788: "The Bridge Builder"

An architect who constructs a direct channel between Ethereum's execution and consensus layers, enhancing application safety and efficiency.

• Ethereum EIP-4788 introduces a direct communication channel between Ethereum's execution and consensus layers, enhancing application safety and efficiency. Imagine Ethereum as a bustling city where information flows like traffic between different neighborhoods. But sometimes, important messages get stuck in traffic jams, causing delays and headaches for everyone.
• Enter the "beacon block root", a fast lane connecting Ethereum's execution and consensus layers like a secret tunnel between busy districts. With this upgrade, applications can now access critical information with lightning speed, ensuring smooth sailing for staking protocols and other vital services. It's like installing a high-speed elevator in a skyscraper, making communication within the Ethereum ecosystem a breeze! 🌟🏙️

EIP-4844: "The Luggage Carrier"

A quirky inventor who introduces blob-carrying transactions to ease network congestion, improving Ethereum's speed and efficiency.

• Ethereum EIP-4844 introduces blob-carrying transactions to alleviate congestion. Think of Ethereum as a bustling airport where transactions are like planes trying to land on a crowded runway. But with so many flights coming in, it's chaos!
• Enter the blobs, tiny cargo containers that hitch a ride with regular transactions, like passengers with carry-on luggage. These blobs lighten the load on the runway, clearing the skies for smoother traffic flow. Primarily used by sequencers of Ethereum Layer 2 rollups, blobs ensure faster processing without sacrificing decentralization. It's like adding extra runways to the airport, making Ethereum's airspace more efficient and your journey through the blockchain a breeze! 🛫🌐

EIP-6780: "The Code Keeper"

A wise sage who limits the power of SELFDESTRUCT, safeguarding Ethereum's stability and reliability for all its inhabitants.

• Ethereum EIP-6780 aims to improve Ethereum's stability and reliability by addressing the SELFDESTRUCT operation. Picture Ethereum as a playground where smart contracts are like kids playing with LEGOs. But sometimes, they get a little too excited and start knocking down each other's creations!
• That's where SELFDESTRUCT comes in, like a big red "undo" button for removing unwanted LEGO pieces. But if everyone had access to it, chaos would ensue! So, this proposal puts a lock on SELFDESTRUCT, ensuring it can only be used by the same contract that created it. It's like giving each kid their own toy box – keeping the playground fun and safe for everyone to build their dreams without the risk of accidental demolition! 🚧🧱

EIP-5656: "The Data Dynamo"

An engineer who introduces the MCOPY instruction to optimize memory usage and reduce gas costs with lightning-fast data copying abilities.

• Ethereum EIP-5656 introduces the MCOPY instruction to Ethereum's Virtual Machine (EVM), optimizing memory usage and reducing gas costs. This instruction facilitates efficient data copying within Ethereum's memory, enhancing transaction processing efficiency. Imagine EVM as a busy workshop where data is like raw material waiting to be crafted into masterpieces. But sometimes, moving this data around feels like dragging heavy blocks of marble!
• That's where MCOPY comes to the rescue, like a magical wand that zips data around the workshop with ease. By streamlining data copying within Ethereum's memory, MCOPY transforms the workshop into a well-oiled machine, churning out transactions faster than ever. It's like upgrading from manual tools to power tools, making Ethereum's workshop more efficient and accommodating for its growing community of creators! 🛠️🎨

EIP-7044: "The Exit Maestro"

A conductor who simplifies voluntary exits in Ethereum's staking process, orchestrating smooth user experiences and enhancing usability for all stakers.

• Ethereum EIP-7044 simplifies voluntary exits in Ethereum's staking process, ensuring smoother user experiences and enhancing usability. Think of Ethereum's staking process as a grand theater where stakers are like performers waiting for their cue to take a bow. But sometimes, the backstage door is hard to find, leaving stakers feeling lost in the wings!
• That's where EIP-7044 steps in, like a helpful guide handing out backstage passes with no expiration date. By extending the validity of voluntary exit messages indefinitely, this proposal ensures stakers can gracefully exit the stage whenever they choose, regardless of any changes happening behind the scenes. It's like adding a VIP entrance to the theater, making Ethereum's staking process more accessible and appealing to all performers! 🎭🌟

EIP-7045: "The Time Extender"

A time-traveling adventurer who extends the window for validators to attest to blocks, speeding up Ethereum's block confirmation process and enhancing network efficiency.

• Ethereum EIP-7045 aims to enhance Ethereum's block confirmation process by extending the window for validators to attest to blocks. Validators play a crucial role in confirming block validity through attestations. Imagine Ethereum's block confirmation process as a relay race where validators pass the baton of block validation. But sometimes, the handoff happens too quickly, leaving validators scrambling to keep up.
• That's where EIP-7045 comes into play, like adding an extra lap to the race, giving validators more time to ensure a smooth handover. By extending the time available for validators to confirm blocks, this proposal aims to speed up the confirmation process and boost network efficiency. It's like giving the relay team a chance to catch their breath and maintain their pace, ensuring Ethereum can handle even the busiest of network traffic with ease! 🏃‍♂️🏁

EIP-7516: "The Price Scanner"

A mystical oracle who introduces the BLOBBASEFEE opcode, enabling smart contracts to query the base fee for transactions.

• Ethereum EIP-7516 introduces the BLOBBASEFEE opcode, optimizing resource allocation and transaction processing in the Ethereum network. Picture Ethereum's network as a busy marketplace where transactions are like customers lining up to make purchases. But sometimes, figuring out the right price to pay feels like haggling without a price tag!
• That's where the BLOBBASEFEE opcode steps in, like a handy price scanner that lets customers know the base fee for their transactions upfront. By enabling rollups and layer 2 solutions to access this information directly, Ethereum ensures smooth and efficient transaction processing. It's like adding price tags to every item in the marketplace, making transactions faster, fairer, and more streamlined for everyone involved! 💰🛒

Zooming out on the Ethereum roadmap, it's easy to see why Dencun holds paramount significance for the network – it’s the first major upgrade after The Merge and a key component in the network's The Surge period. It is these groundbreaking proposals and their implementation that unlock new levels of scalability, security, and usability for the next generation of digital asset entrepreneurs, adopters and decentralized innovation.