The Ethereum blockchain is introducing a new upgrade called Dencun. Set to be released on March 13th, the upgrade will, among other things, make layer-2 networks built on top of the Ethereum mainnet cheaper and faster. Here’s everything you need to know:
What is the Ethereum Dencun Upgrade?
The Ethereum network was initially launched as a proof-of-work (PoW) compatible blockchain. Slow transactions and energy consumption accompanied this model of the consensus algorithm. With The Merge upgrade in September 2022, the Ethereum blockchain migrated to an energy-efficient proof-of-stake (PoS) mechanism. Still, the issue of transaction throughput remained.
Layer-2 blockchains were created to solve the scalability issue faced by Ethereum. Using Ethereum’s security and decentralization, these L2 projects offer faster and cheaper transactions to users. Examples of these L2 blockchains include Polygon, Optimism, Base, Arbitrum, zkSync, and others.
Ethereum introduced the Dencun upgrade to upscale the performance of these L2 networks. The upgrade comes with a feature called proto-danksharding, designed to reduce data availability (data blobs) and transaction costs for L2 networks. This feature precedes a higher feature called Danksharding, which will upscale the functionalities of the proto-danksharding.
Before going live on the Ethereum mainnet, Dencun has been deployed on testnets such as Goerli, Sepolia, and Holesky. Developers anticipate that the Dencun upgrade, after being fully integrated with the Ethereum network, will enable the blockchain to process as many as 100,000 transactions per second.
According to Tim Beiko of the Ethereum Foundation, the Dencun upgrade will roll out on the Ethereum mainnet at slot number 8626176, which is on March 13th. With this upgrade, more developers will likely deploy their decentralized applications (dApps) on the Ethereum network. The blockchain may also see more users flock to its ecosystem.
Will ETH Price Increase Post-Dencun Upgrade?
Market experts predict that the Dencun upgrade may trigger a short-term price increase for Ethereum’s native coin, ETH. Still, there is no guarantee that the volatile asset will rise post-Dencun upgrade.
ETH currently trades at $2,490, representing a mild 1.6% increase in the last 24 hours and an 8.8% increase over the past week.
Source: CoinStats
