Upgrade Dencun Successfully Deployed on Ethereum Mainnet

The highly anticipated Ethereum upgrade, Dencun, which combines Deneb (Consensus update) and Cancun (Execution update), has officially gone live as of March 13, 2024.

Dencun successfully implemented
Following several challenging deployment attempts for Dencun, Ethereum developers faced multiple unsuccessful upgrade trials, leading to continuous adjustments in the initial roadmap from 2023 to late February 2024.

Today, at 8:55 PM on March 13, 2024 (Vietnam time), the Dencun upgrade—a combination of Deneb (Consensus update) and Cancun (Execution update) on the Ethereum network—was officially activated for deployment at epoch 269568, as previously scheduled.

The account "sassal.eth" from The Daily Gwei founder also announced the official deployment of Dencun on the Ethereum mainnet, accompanied by a series of proposed EIPs expected to enhance the network's scalability.

Account X from layer-2 Arbitrum noted it would take approximately 1-2 hours for transactions to be included in the EIP-4844 data blob, marking the beginning of the changes brought by Dencun.

Significance of the Dencun Upgrade for Ethereum and Layer-2s
As introduced by Coin68, the Dencun upgrade addresses critical issues of the world's leading smart contract network. Dencun introduces the concept of "proto-danksharding," designed to improve transaction processing scalability while reducing gas fees. It also lays the groundwork for future upgrades like danksharding, promising comprehensive changes to Ethereum's landscape.

Dencun is the latest major update bringing numerous improvement proposals to Ethereum such as EIP-1153, EIP-4788, EIP-6780, EIP-7044,... since the Shanghai upgrade unlocked ETH staking in April 2023. One of the significant proposals is EIP-4844, providing a new block structure called "blob" to store transaction data from layer-2s. All these proposals bring substantial changes to Ethereum, including:

Reducing transaction storage costs;
Enhancing cross-chain designs and staking pools;
Updating minor changes in the EVM;
Changing data storage structures in blocks;
Removing code segments allowing smart contract cancellations;
Potential to increase processing up to 100,000 transactions per second.

Image explaining "blob" - the new block structure optimizing transaction data storage post-Dencun. Source: TrueWaveBreak

By using blob to store transactions, layer-2s on Ethereum can reduce the burden of transferring data to the mainnet, thereby significantly reducing fees on these platforms. Ethereum has recently witnessed skyrocketing gas fees, greatly impacting user experience. Consequently, Dencun incentivizes users to migrate to more layer-2 solutions, alleviating the load on the ETH main network.

Estimated changes in transaction fees across Ethereum layer-2s post-Dencun. Source: Into the Block (03/11/2024)

As a critical upgrade, Ethereum underwent three testnet deployments on Goerli (01/17), Sepolia (01/30), and Holesky (02/07) to test and prevent any potential issues prior to the mainnet launch.

Moreover, these improvements also open up possibilities for DeFi, Gaming, metaverse... particularly in the Liquid Restaking (LRT) segment—a smart contract allowing ETH stakers to reuse locked ETH to enhance security for other protocols.

This segment was predicted to become the focal point of the post-Dencun market. The Total Value Locked (TVL) of projects in this segment has increased to over $6.5 billion USD. Leading the rankings is ether.fi—the 49th launchpool restaking project on Binance—with a recorded TVL of $2.53 billion USD, marking a 116% increase in the last 30 days.

Total Value Locked (TVL) of liquid restaking protocols reported on DefiLlama (03/13/2024)

Pioneers introducing the restaking model to the cryptocurrency community led by the EigenLayer protocol received a $100 million USD investment from the renowned a16z crypto investment fund.

Other restaking projects like Puffer Finance and Renzo Protocol are seen as potential competitors to EigenLayer after receiving investments from Binance Labs. Additionally, there are other formidable names such as Swell, Kelp DAO, and Zircuit.

Price fluctuations "post-Dencun"
Since the initial announcement of the projected Dencun upgrade schedule in late October 2023, ETH has experienced a significant "bull run," surpassing the $3,500 USD mark. At the time, ETH is fluctuating around $3,982 USD, although slightly lower than the recent ATH of $4,093 USD set 2 days ago, this price is only 23% away from the all-time high of $4,868 USD set in November 2021.

4-hour chart of ETH/USDT trading pair on Binance. Screenshot taken at 09:30 PM on March 13, 2024

Several tokens in the Liquid Staking segment also followed ETH's price, with LDO, FXS recording increases of 5-8% in the past 24 hours.

Since January 2024, Ethereum developers have begun discussions on the next upgrade, named Pectra. However, Pectra has yet to have its detailed deployment roadmap and content of changes determined.