Ethereum Dencun upgrade is coming soon. Experts evaluate the network and its impact on the ETH market.

As the digital currency space evolves, Ethereum is gearing up for its most significant technological boost in over a year with the upcoming Dencun upgrade.

This upgrade, scheduled for Wednesday 13th 2024, is expected to be a landmark event for Ethereum, especially its layer 2 (L2) network, which has become critical for scalability and operational efficiency.

The upgrade is scheduled to begin at Beacon Epoch 269568 (Beacon slot 8626176) on March 13, 2024 at 13:55:35 UTC (9:55:35 ET).

Dencun is expected to be the most significant update since Ethereum. Shapella upgrade in April 2023We have introduced a function to withdraw staked Ethereum (ETH).

Dencun Unboxing: A Dual Upgrade with Huge Potential

Dencun, named after a combination of the Deneb and Cancun projects, refers to a dual upgrade that affects both the consensus and execution layers of Ethereum.

The core of this upgrade is the introduction of “proto-danksharding” through Ethereum Improvement Proposal (EIP) 4844, which aims to revolutionize the blockchain’s data processing capabilities.

This is expected to dramatically lower fees for the L2 “rollup,” a secondary network built on top of Ethereum to increase scalability and efficiency by bundling transactions together.

Proto-Danksharding: The forefront of Ethereum scalability initiatives

Proto-danksharding introduces a new way to store transaction data using “blobs” to significantly alleviate the data processing load on L2 networks, such as Arbitrum, Optimism, and Polygon. These networks play a critical role in scaling Ethereum by aggregating user transactions and settling them in large batches on the main Ethereum chain.

The Dencun upgrade is expected to make this process more efficient, reducing operational costs and theoretically lowering transaction fees for end users. This move toward “sharding” represents a temporary solution to Ethereum’s high gas fee problem and sets the stage for more comprehensive sharding solutions in the future.

Economic Impact and Market Outlook

The cryptocurrency community and market analysts are closely watching the Dencun upgrade and recognize its potential to significantly impact Ethereum’s operational dynamics.

paul brodyEY’s global blockchain leader, highlights the upgrade capacity that could move Ethereum from undercapacity to overcapacity.

He comments on the transformative nature of these changes, which are expected to accommodate explosive growth in trading. “Ethereum is now transitioning from undercapacity to overcapacity… We are seeing transformational change,” Brody said, emphasizing the important role the upgrades play in supporting the exponential growth in trading volume.

While the immediate impact of the Dencun upgrade on the Ethereum (ETH) price is debatable, there is agreement among market observers that the long-term impact could be significant.

According to Ruslan Lyenka, head of markets at YouHodler, said the upgrade may not have a significant impact on the price of ETH in the short term. However, he offered a positive outlook on Ethereum’s long-term value, citing the potential for upgrades to improve transaction speeds and lower fees.

These improvements are expected to strengthen Ethereum’s leading position in the competitive landscape of blockchain platforms.

Forward-thinking: What’s next for Ethereum

After the Dencun upgrade, the focus will shift to what’s next for Ethereum, with the upcoming Electra + Praha (Petra) upgrade already on the horizon. These future upgrades are expected to include innovations such as “Verkle Trees,” which aim to further improve Ethereum’s data storage capabilities.

With each successive upgrade, Ethereum continues to solidify its foundation, leading the blockchain ecosystem into a future characterized by improved scalability, efficiency, and user-friendliness.

In essence, the Dencun upgrade embodies Ethereum’s ongoing commitment to innovation and scalability. As the blockchain environment matures, Ethereum’s role as the primary platform for developers, investors, and enterprises will become stronger.

Read more: Why has Ethereum (ETH) surged more than 38% in two months?