What you need to know about Dencun – Ethereum’s next planned upgrade 

After the successful implementation of 'Shapella,' the Ethereum network is set to undergo another transformation with the upcoming 'Dencun' upgrade.

According to Ethereum Foundation community manager Tim Beiko’s May 3 blog post, Ethereum’s core developers are already in "the final stages of planning" for Dencun. While earlier upgrades sought to reduce energy consumption, increase scalability, and improve transaction speed, the major goal of the Dencun update is to lower transaction costs connected with the Ethereum network.

The Dencun upgrade gets its name from a combination of two elements: "Deneb," the first-magnitude star in the constellation Cygnus, and "Cancun," a city in Mexico. This naming convention follows a similar pattern to the Shapella upgrade, which combined the Chinese city Shanghai with “Capella,” the brightest star in the constellation Auriga.

The Dencun upgrade refers to the deployment of several Ethereum Improvement Proposals (EIPs), specifically EIP-4844, EIP-6780, EIP-1153, and EIP-6475. A quick reminder here is that these EIPs undergo a thorough review process within the Ethereum community and, if approved, are incorporated into the network's code. The four EIPs mentioned under the Dencun upgrade focus on enhancing Ethereum's execution layer, which is the blockchain that specialises in processing transactions for decentralised applications (dApps).

Let us begin with understanding EIP-4844, also known as Proto-Danksharding. This EIP introduces a new data layer to the Ethereum network, which will serve as an interaction point for both the current consensus layer and the execution layer. In simple terms, proto-Danksharding is another version of sharding, a process that divides data across multiple machines to enhance processing speed and improve network scalability.

With the introduction of EIP-4844, temporary "data blobs" are brought into the picture. These blobs are opaque string-byte strings with a maximum size of 125 KB. Their purpose is to alleviate the network's burden caused by growing block sizes and rising transaction costs.

The upgrade could have a big impact on layer 2 rollups as well. Layer 2 solutions are expected to leverage these blobs to retrieve data more efficiently, as the smaller size of the blobs allows for quicker data retrieval. Additionally, these blobs are not permanently stored on the blockchain, which in turn could lead to a reduction in gas fees.

The Dencun upgrade introduces another change through EIP-6780, which involves the deactivation of the SELFDESTRUCT opcode. This opcode allows for the creation and deletion of contracts within a single transaction while preserving the functionality of SELFDESTRUCT. However, it is important to note that the opcode will not delete the storage or code of the contract in all other cases.

EIP-1153 proposes a solution that allows for the discarding of certain data from transactions instead of storing it on the blockchain. This is achieved through the implementation of two new opcodes, TSTORE and TLOAD, which provide temporary storage that is cleared at the completion of each transaction. These introductions could open up new possibilities, such as single-transaction ERC-20 approvals, improving the availability of block space, implementing re-entry locks, and reducing the costs associated with on-chain data storage.

EIP-6475, also known as Simple Serialize (SSZ) Optionals, works in conjunction with Danksharding to introduce new types of transactions. By utilizing SSZ encoding, the transaction format becomes compatible with future SSZ objects that will be introduced to the Ethereum network. This upgrade enhances the efficiency and compatibility of transactions, paving the way for future developments and improvements within the Ethereum ecosystem.

Dencun is still in development, and there is no set schedule for when the improvements will be deployed. Furthermore, the extent to which it could affect the Ethereum network and its users is still unknown. However, if Dencun is carried out effectively, it has the potential to be an important milestone for the Ethereum ecosystem. Users may enjoy a more cost-effective experience if transaction costs are reduced. The same might make Ethereum more accessible and appealing, reinforcing its market position.