With all eyes on Bitcoin, Ethereum risks being ignored. Ethereum is more versatile for smart contracts, dApps, and DeFi. Its appeal lies not only in the cryptocurrency but also in the network’s potential. Speed, interoperability, security, and stability are the unique features of the Ethereum platform that attract developers and projects. The upcoming Dencun upgrade catalyzes success, enhancing the blockchain’s scalability. Network capacity is a growing issue for Ethereum, with the gas limit remaining unchanged for the past few years. The blockchain’s capacity is significantly increased since several transactions must be processed simultaneously.
Ethereum Will Adopt EIP-4844, Called Proto-Danksharding
The Dencun upgrade is Ethereum’s latest hard fork, representing a massive protocol change. Users don’t need to do anything to prepare for the technical upgrade because it will happen seamlessly, so they can continue to interact with Ethereum and its Layer 2 networks. They should see lower gas prices once the Dencun upgrade is complete. The Dencun upgrade is implemented across testnets to assess readiness and ensure a smooth transition. The mainnet launch is scheduled for the first quarter of 2024. It represents a fusion of Cancun and Deneb, introducing changes to Ethereum’s consensus and execution layers.
The Dencun upgrade is poised to be a transformative step owing to the introduction of proto-danksharding. While danksharding is still being finalized, EIP-4844 brings about proto-danksharding, which should tackle the issues of high gas fees and limited transaction throughput. To be more precise, it helps scale Ethereum with blob-carrying transactions, which contain a vast amount of data that isn’t accessible to EVM execution; it can only view commitments to the blobs. EIP-4844 maintains decentralization by guaranteeing the size and number of blobs included per block is limited. Ethereum nodes’ computational and storage requirements remain more or less the same.
The Dencun Upgrade Is a Temporary Solution to Enhance Ethereum’s Scalability
Ethereum core developers applied the Dencun upgrade to the Sepolia and Holesky testnets. Integrating proto-danksharding to the Goerli test network was more challenging due to a bug in Prysm, which prevented the network from settling for a few hours. The Dencun upgrade is the end of Goerli as a supported Ethereum testnet; validator teams will exit bit by bit without affecting the network’s stability. Developers and infrastructure providers will move to Sepolia, which benefits from ongoing support from the Ethereum Foundation and has minor storage requirements for running your node.
The Dencun upgrade, aimed at ensuring storage efficiency, lower gas fees, and a better developer experience, is a temporary solution. In other words, while it’s a step in the right direction, it’s not enough to expand Ethereum. A long-term solution is of the essence to strike a balance between scalability, security, and decentralization. According to the experts, Ethereum needs a multi-chain solution focusing on interoperability and security to realize its full potential. The potential growth of the network is limitless in theory, but its future value depends on the adoption rate. Rollups and application-specific blockchains are necessary to increase capacity in the long run.
Ethereum Seeks to Become the Most Secure and Scalable Settlement Layer for dApps
Decentralized applications are developed using the Ethereum blockchain, which combines a smart contract and a front-end user interface. The surge in Ethereum prices and cost of transactions have made developers think twice about suing the network. Top developers are exploring and building Layer 2 integrations, such as Polygon, allowing them to perform fast and cheap transactions. Given that scalability is a critical factor in the success of dApps, it will be supported through blobs of data, which can be processed and stored more efficiently than the current method allows. It’s a targeted innovation that doesn’t disrupt the entire network.
The ambitious improvement will introduce 9 EIPs to enhance the platform’s functionality, security, and overall user experience. Besides EIP-4844, other EIPs considered for inclusion are EIP-1153, EIP-5656, EIP-4788, EIP-6780, EIP-7044, EIP-7045, EIP-7516, and EIP-7514. The technical upgrade marks the beginning of the next phase in Ethereum’s roadmap, which includes various developments, notably rollups. As rollup technology has advanced, it’s captured the attention of the Ethereum community, emerging as a more efficient solution. Upgrades related to scalability by rollups and data sharding will result in a throughput of 100,000 transactions per second across Ethereum and Layer 2 blockchains.
Concluding Thoughts
Certainly, Ethereum can provide tremendous value and utility, but it still has some growing up to do. The highly-awaited Dencun upgrade, coming soon in 2024, kicks off the Surge era, the second phase in Ethereum’s development roadmap. With the transition from the Merge to the Surge, Ethereum stands ready to offer an improved and user-centric blockchain experience, mirroring its commitment to staying at the forefront of innovation. The regulatory framework for cryptocurrency continues to take shape worldwide, providing investors and users with assurance of how regulatory bodies and governments will treat Ethereum.
A cryptocurrency bull market is expected to happen in 2024, with Ethereum at its peak. The upcoming upgrades to the network will cement its dominance as the leading blockchain for Web3 development, providing a robust ecosystem for creating smart contracts and dApps. The future of Ethereum holds promise, but there are many challenges ahead. The technical improvements on the network are centered around addressing its weaknesses. Innovations such as EigenLayer tackle Ethereum’s scalability via a restaking system, which enables the rehypothecation of tokens on the consensus layer. They can extend security and validate new applications built on top of Ethereum.
All in all, important events regarding the cryptocurrency industry are set to occur in 2024. After the Dencun upgrade, Ethereum Layer 2 altcoins could explode in popularity, namely ARB, OP, IMX, and MATIC. They all bring unique advancements to the blockchain ecosystem, so investors and market participants keep an eye on their progress. Maybe you should, too.