What is Cancun-Deneb (Dencun)?
Cancun is the name of the execution part of the Ethereum hard fork known as Cancun-Deneb (Dencun). It is the first major upgrade of the world’s second-largest cryptocurrency since Shapella, activated in April 2023.
Cancun-Deneb comprises two layers of upgrades: the consensus layer (Deneb) and the execution layer (Cancun).
According to Ethereum’s roadmap, network changes do not follow a strict linear plan. Dencun spans several areas: scalability, lower gas fees, enhanced security, improved cross-network communication, and more efficient data storage.
The developers’ long-term strategy envisages Dencun as a preparatory step toward full data partitioning — sharding.
What upgrades are coming in Cancun-Deneb?
The list of components for Cancun was approved by developers in June 2023. It includes the following improvement proposals:
- EIP-4844 — the most anticipated upgrade to the Ethereum blockchain. It introduces Proto-Danksharding, designed to scale the network by creating a new transaction type for large binary data blobs. It is expected to lower fees for L2 solutions built on Rollups;
- EIP-4788 — aimed at improving the efficiency of cross-chain bridges and staking pools;
- EIP-1153 — intended to optimize block space and reduce fees for on-chain data storage;
- EIP-5656 — improves the EVM;
- EIP-6780 — removes legacy code that could interfere with smart contracts.
The specification for Deneb, the consensus layer, includes improvements to support the hard fork’s key upgrade, EIP-4844 (Proto-Danksharding): EIP-7044, EIP-7045 and EIP-7514. These elements will enhance the user experience and network security.
Originally, the Ethereum Dencun hard fork was planned for October 2023. However, due to issues across ten testnets, the upgrade was postponed to 2024.
What comes next for Ethereum after the upgrades?
Almost half a year after Shapella, Ethereum’s previous upgrade, the ecosystem’s momentum had waned. JPMorgan analysts called activity in the network “disappointing”. The bank noted a 12% drop in daily transactions, a near-20% decline in daily active addresses, and about an 8% fall in total value locked (TVL) in DeFi protocols.
That, however, refers only to on-chain activity on Ethereum’s mainnet. ETH’s development strategy envisages shifting activity to other layers, namely L2 and L3 solutions based on Rollups.
In November 2023, Ethereum founder Vitalik Buterin proposed revisiting the Plasma scaling concept. Work on implementing the technology had been postponed because of high data-storage costs. However, Buterin believes that deploying zk-SNARKs can solve this problem.
Successful implementation of Dencun’s upgrades opens new opportunities for L2 solutions and individual decentralised applications. For example, the DEX Uniswap is awaiting Cancun’s rollout to launch Uniswap v4, which will enable cross-network asset swaps, dynamic fee adjustments, and the creation of various order types.
StarkWare, the developer of the L2 StarkNet, is awaiting the hard fork to adapt its network to a set of updates that will improve efficiency and lower users’ transaction costs. Dencun is also expected to affect other layer-two networks, including Optimism, Arbitrum and zkSync.