Ethereum Dencun Upgrade: How ETH Achieves 100-1000x Performance Leap

Ethereum, as the world’s largest smart contract platform, is brewing a far-reaching technical upgrade—Dencum (Cancun-Deneb). The core of this upgrade is the EIP-4844 proposal, which will introduce Proto-Danksharding technology, widely regarded as a turning point for Ethereum scalability breakthroughs.

Three Key Highlights of the ETH Dencun Upgrade

1. Performance Leap Brought by Proto-Danksharding

EIP-4844 is the soul of this upgrade. It introduces a new data storage mechanism—“blobs” (data blocks). Unlike traditional methods, these blob data will be stored temporarily on the Beacon Chain rather than permanently on the Ethereum mainnet. This design directly addresses the long-standing data bloat issues that have plagued Ethereum.

Proto-Danksharding represents a shift from single processing to parallel processing. It is a transitional scheme toward full Danksharding, expected to increase Ethereum throughput from the current 15 TPS to 1,000 TPS—meaning a performance boost of 50-60 times.

2. Significant Reduction in Gas Fees

For ordinary users and developers, the most immediate benefit is a substantial decrease in transaction costs. EIP-4844 optimizes data processing workflows, making it:

• Layer 2 solutions’ gas fees expected to drop by 10-100 times
• Transaction fees on Layer 2 networks likely to fall below $0.001
• Smart contract execution costs reduced due to EIP-1153’s temporary storage mechanism

3. Multiple EIPs Collaborate to Enhance Network Stability

In addition to EIP-4844, four other important proposals are included:

EIP-1153 — Temporary storage mechanism providing low-cost temporary data storage for smart contract execution

EIP-4788 — Enhances Ethereum consensus layer, allowing execution layer to directly access Beacon Block information, simplifying cross-layer interactions

EIP-5656 — MCOPY opcode, optimizing memory data copying efficiency

EIP-6780 — Limits SELFDESTRUCT functionality to prevent malicious contracts from damaging the network

Confirmed Timeline for ETH Upgrade

The Ethereum Dencun upgrade is scheduled for Q1 2024, with testnet deployment dates as follows:

• Goerli Testnet — January 17
• Sepolia Testnet — January 30
• Holesky Testnet — February 7
• Mainnet Deployment — End of Q1 (expected March)

Proto-Danksharding has already been tested on Devnet 12, with the technical plan becoming more mature.

From Merge to Dencun: The Evolution Path of ETH 2.0

Beacon Chain launched the PoS era (December 2020)

Ethereum introduced an independent proof-of-stake chain, paving the way for subsequent upgrades

Merge completed the unification of the consensus layer (September 2022)

Merged the original PoW mainnet with the Beacon Chain, reducing energy consumption by over 99.5%, a milestone in ETH’s development history

Shanghai upgrade released liquidity (April 2023)

Users can withdraw staked ETH and rewards, stimulating more participation in staking, leading to a boom in the liquid staking ecosystem

Dencun set to reshape scalability (Q1 2024)

From data storage to network throughput, comprehensively enhancing Ethereum’s capacity

Practical Impact of Dencun on Users and Developers

User Perspective

• Significantly faster transaction speeds, confirmation times reduced from seconds to milliseconds
• Small transactions nearly free, revitalizing DeFi arbitrage and micro-payments
• Layer 2 networks more competitive, cross-chain costs greatly reduced

Developer Innovation Space

Proto-Danksharding fixed data bandwidth at 1 MB per slot, meaning:

• Developers can store and access more data
• Complex application logic can be implemented
• New use cases and business models emerge

For example, high-frequency DeFi trading, on-chain gaming, real-time data oracles, and other data-intensive applications will find new development opportunities.

Revival of the Liquid Staking Ecosystem

The Dencun upgrade is expected to stimulate demand for liquid staking products, allowing users to participate in staking for rewards without losing ETH liquidity. This is a major positive for protocols like Lido, Rocket Pool, and others.

Risks Behind the Upgrade

Despite promising prospects, the technical upgrade carries risks that cannot be ignored:

Technical Complexity — Such a large-scale protocol update may still harbor bugs and vulnerabilities, although multiple testnets have demonstrated stability

Contract Compatibility — Some legacy contracts may need adjustments to adapt to new mechanisms, with potential temporary disruptions during migration

Network Transition Period — Proto-Danksharding is a transitional scheme; full Danksharding deployment will still require years of refinement

This is why the team has repeatedly tested on multiple testnets before official deployment to minimize risks.

From Proto to Full: Ethereum’s Long-term Vision

Dencun is just a step in the process. After the upgrade, Ethereum will continue evolving, ultimately deploying full Danksharding. This design involves dividing the network into multiple shards, each handling transactions and contracts independently, achieving true horizontal scalability.

At that point, Ethereum’s throughput, cost efficiency, and application possibilities will undergo a qualitative leap.

Why Layer 2 Projects Are Focusing on Dencun

Layer 2 solutions (Optimism, Arbitrum, etc.) are particularly optimistic about the Dencun upgrade because:

• Cost Structure Reshaping — The introduction of Blob storage will directly lower the costs associated with publishing state proofs to the mainnet
• Enhanced Competitiveness — Lower fees will significantly boost Layer 2’s competitiveness against other blockchains
• Ecosystem Prosperity — Reduced user migration costs will attract more applications and capital into Layer 2 ecosystems

Summary

The Ethereum Dencun upgrade symbolizes a transition from “usable” to “excellent to use.” Through Proto-Danksharding and a series of supporting EIPs, ETH is addressing its long-standing scalability bottlenecks.

For investors, this upgrade will redefine Ethereum’s value proposition—from a store of value to an efficient application platform. For users and developers, lower costs and faster speeds mean more application scenarios and business opportunities.

As the Q1 2024 upgrade approaches, market expectations for Ethereum’s long-term development are adjusting. This is not just a technical upgrade but a necessary condition for the sustainable growth of the Ethereum ecosystem.