Ethereum’s Dencun Upgrade And Proto-Danksharding (EIP-4844), Explained

Key Takeaways

• The introduction of proto-Danksharding, part of EIP-4844, lays the groundwork for future full-sharding implementations. 
• The Dencun upgrade is expected to significantly increase Ethereum’s transaction processing capacity to handle over 100,000 transactions per second. 
• The introduction of a novel fee system for block data introduces a dual-dimensional aspect to block building, where block constructors must navigate both gas and data limits simultaneously.
• The use of KZG commitments enhances the privacy and integrity of off-chain blob data, ensuring that the EVM perceives only the commitment to the blob data.

What Is Ethereum’s Dencun Upgrade

An important advancement in Ethereum’s continuous evolution, the Ethereum Dencun upgrade — focuses on improving the scalability and efficiency of the blockchain. This update forms a component of Ethereum’s larger plan, dubbed “The Surge,” which aims to solve the network’s scalability problems.

The Dencun upgrade includes multiple Ethereum Improvement Proposals (EIPs) that seek to optimize different areas of the network, ranging from data handling and storage efficiencies to security enhancements. These enhancements are dispersed throughout Ethereum’s consensus and execution layers, with particular EIPs concentrating on topics like beacon block root integration, temporary storage, and smart contract memory copying that is more effective.

Testing of the upgrade have been conducted on several Ethereum testnets, such as Goerli and Sepolia. The ultimate testnet rollout on Holesky is planned to give a precise date for the upgrade’s mainnet activation. The impending Dencun upgrade set to launch in mid-March for Ethereum will bring forth a concept termed “proto-danksharding.”

Key Features Of The Ethereum’s Dencun Upgrade

Significant features of the Ethereum’s Dencun upgrade include the following:

Proto-Danksharding (EIP-4844)

EIP-4844 seeks to lay down a crucial foundation for the effective implementation of full danksharding, a sharding methodology pioneered by Dankrad Feist. However, it’s important to note that EIP-4844 won’t directly execute sharding; instead, it acts as a fundamental building block, paving the way to improve the scalability of layer-2 rollup solutions without having to wait for complete sharding implementation.

A fundamental aspect of the Dencun update is the implementation of proto-danksharding. With proto-danksharding, data handling and storage on the Ethereum network is improved, which lowers transaction costs considerably, especially for layer-2 solutions. 

This is accomplished by introducing blob-carrying transactions, which, in comparison to the existing approach that employs calldata, enable the inclusion of huge data packets (blobs) in transactions more effectively. Because these blobs are kept off-chain and referred to within transactions, there is less data held on the blockchain, which lowers the price of data processing and storage.

Proto-Danksharding is set to cap the blobs per block at 16, each not exceeding 128 KB, thereby appending approximately 2 MB of space to the blocks. In contrast, Danksharding will permit more blobs, elevating the count to 256 data blobs within a single block.

Improved Transaction Processing Capabilities

Ethereum’s transaction processing capacity should significantly rise as a result of the upgrade, possibly allowing the network to process more than 100,000 transactions per second. The Ethereum network’s expanding user base and decentralized applications (dApps) depend on this capacity increase.

2-Dimension Fee Market

With the advent of proto-Danksharding, a novel fee system for blob-data (data fees) will be introduced. The dual-dimensional aspect implies that block constructors must navigate two distinct thresholds (gas limit and data limit) simultaneously while processing transactions.

In the Ethereum network, there exist two variables and four constants: Target per block, Max per block, Basefee, and Blob. While gas and blob values are adjustable, the target remains fixed. The blob fee, denoted in gas, fluctuates to maintain an average number of blobs per block matching the target.

However, this dual-dimensional aspect complicates block building.  Instead of merely prioritizing transactions based on fees until hitting gas limits, builders must navigate both gas and blob limits concurrently, presenting a more intricate challenge. 

KZG Commitments

A KZG commitment, named after its founders Kate, Zaverucha, and Goldberg, constitutes a cryptographic commitment scheme enabling a committer to associate with the blob data without divulging it. This mechanism bolsters both the integrity and privacy of blob data off-chain. 

Given that blob data remains inaccessible to Ethereum Virtual Machine (EVM) execution, the EVM solely perceives a KZG commitment to the blob, ensuring confidentiality and data integrity.

Danksharding Vs. Proto-DankSharding

Danksharding is an advanced version of sharding that divides the Ethereum network into more manageable, smaller segments (shards) that can handle smart contracts and transactions concurrently, with the goal of significantly increasing Ethereum’s scalability. Its goal is to preserve security and decentralization while boosting network capacity and lowering transaction costs. 

On the other hand, proto-Danksharding is a stage in between before Danksharding is fully implemented. It presents some of the essential elements and workings of Danksharding, including the idea of blobs for data availability, but in a more straightforward manner that allows for quicker integration with the current Ethereum framework. 

The Danksharding architecture may be tested and improved gradually with this phased method, which prepares the system for full deployment.

Which Layer-2 Solutions Are Likely To Benefit From The Etheruem’s Dencun Upgrade?

The Ethereum Dencun update, which is likely a reference to improvements inside the Ethereum ecosystem, is anticipated to help a number of L2 solutions, especially those that make use of rollup technology. 

Rollups stand to benefit greatly from these enhancements, which are intended to increase transaction speed on the Ethereum network, lower costs, and improve data availability. This includes both the optimistic and zero-knowledge (ZK) variants. 

This update may result in rollup processes that are more economical and efficient, which would improve the performance of L2 solutions such as Arbitrum, zkSync, StarkWare, and Optimism. The Dencun improvement would help these platforms provide quicker, more scalable, and more secure dApps and services on top of the Ethereum blockchain by indirectly enhancing the underlying infrastructure.

Conclusion

The Ethereum Dencun upgrade, a crucial step in Ethereum’s evolution, focuses on scalability and efficiency. It includes features like proto-Danksharding, improving data handling and storage, and a 2D fee market for better transaction processing. 

KZG commitments enhance data integrity, while Danksharding aims for greater scalability. Layer-2 solutions, especially rollups, stand to benefit significantly from these enhancements, paving the way for faster, more scalable, and secure dApps and services on Ethereum.

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