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The Dencun upgrade is finally coming.
As Bitcoin breaks through its historical highest value, the narrative main line of Ethereum has officially entered the countdown of the last week.According to the Ethereum Foundation, the Dencun network upgrade has been successfully activated on all test networks.Ethereum will be upgraded on the main network at 8626176 on March 13, 2024 at 21:55 Beijing time.
This upgrade is of great significance to the Ethereum ecosystem and is another important development node after Shapella upgrade.
As an important beginning of the “The Surge” phase in the Ethereum 2.0 upgrade route.Dencun upgrade has been postponed due to bug problems and was called “Cancun, which has not been here for a long time.”Now, after a series of test deployments at the beginning of the year, the Dencun upgrade is ready.In this article, Running Finance will help you understand the “key points” worth paying attention to in this Dencun upgrade through an in-depth and easy-to-understand perspective, hoping to provide you with in-depth value insights.
Core content: EIP4844
The Dencun upgrade mainly covers the consensus layer and execution layer of Ethereum, with content focusing on fee reduction, speedup, security, and user experience.Among them, EIP-4844 is the core content of this Dencun upgrade, aiming to improve the storage efficiency of the Ethereum system and reduce transaction costs.
The high gas fees have always been the biggest obstacle to the development of Ethereum, and the world has been suffering for a long time.It is reported that during peak hours, users have paid more than $100 in transaction fees.According to Etherscan, the average Gas fee for swaps is about $79.
From a short-term perspective, Rollup may be Ethereum’s only scalability solution without trust. It can increase Ethereum’s processing power without increasing the burden on the network without users relying on the system.However, given the continued high L1 transaction fees, action is urgently needed to promote the transition from ecosystem to sharding.Since the current stage of sharding Ethereum is not enough to be implemented, EIP-4844 essentially provides a temporary method that can meet the current stage needs.
EIP-4844 adopts advanced technology called “Blob”, which will use an innovative temporary data storage mechanism on the Ethereum network through the implementation of the Proto-Danksharding process, which will help reduce transaction fees for L2..The L2 network will be able to store data on L1 more efficiently.Blob data is deleted approximately every two weeks, and this cycle is enough for L2 to manage and retrieve data and verify it.Therefore, compared to conventional transaction call data stored on the Ethereum blockchain indefinitely, Blobs have lower data storage costs.
EIP-4844 will also introduce Blob Gas, an independent billing system that follows its own pricing rules to calculate basic expenses.The format preset of the Blob data is consistent with the format in the future sharding specification.This design allows Rollup to effectively alleviate network congestion, while the separate expense market ensures lower fees, making it more economical than the current Calldata storage method.
“Assuming the current network traffic level, once Dencun is implemented, the Gas fee for Layer 2 networks should be immediately reduced by 75%. “A Dencun upgrade is like upgrading a road with only one trail,” said the developer.For the four-lane expressway, Ethereum has entered the modern era of transportation.”
Among the Layer 2 transaction costs, the largest expenditure is the “Call Data” fee, which currently accounts for more than 80% of the total Layer 2 transaction costs.The Blob mechanism can temporarily store data, which is crucial for short-term transaction verification, and can delete this data later to avoid overloading of network storage.The integrity and security of the data processing process are guaranteed by encryption technology that detects data changes.
According to previous analysis reports, Proto-Danksharding will limit the number of blobs per block to 16, and the size of a single blob is no more than 128KB, which is expected to provide an increase of about 2MB to the block space.The newly added data space will allow Optimistic Rollup and Zero Knowledge Rollup to publish proof of transaction data on the chain, using Blobs instead of “Call Data” to provide actual data.Blob data will be cleared in two weeks, and “Call Data” will be permanently stored on the Ethereum blockchain.
The EIP-4844 proposal not only introduces a blob mechanism for transmission transactions, but will also implement comprehensive system changes such as execution layer logic, verification rules and multi-dimensional fee markets, which will lay the foundation for the realization of a complete “slicing” in the future.
How will the Gas fee change?
So, once the Dencun upgrade is completed, what changes will happen to the Gas fee due to the EIP-4844 proposal?
Optimism launched a website to predict the trend of Gas Fee after the introduction of hyperchain blobs.But the website’s predictions are based on the simplified assumption that the Blob Gas base rate is 4.2 gwei, so the actual values may be biased.
The forecast shows that a blob of about 125 kB will cost about 0.001 ETH.Currently, the cost of a 125 kB Call Data is about 30 gwei per Gas multiplied by 16 Gas per byte times 125,000 Gas (approximately 0.06 ETH).
Rollups currently generates approximately 60 transactions per second (TPS).If each transaction is about 200B, then they process about 12kB per second and about 144kB per Eth block.In the initial target, Rollup will only occupy about 30% of the data availability capacity for the 3 blobs in the EIP-4844 proposal (3*125kB = 475 kB).Unless there are other sources of demand for the blob (such as inscriptions), it is expected that in the short term, once Rollups are migrated to the blob, the following situations will occur:
• Blobs will be very cheap (less than 0.001 ETH)
• Rollups transaction fees will also be very cheap (less than $0.05)
*The picture below is the test results of the Gas fee change posted by Twitter netizens.
What did other proposals say?
(1) EIP-1153: Transient storage opcodes are used to process data that are only needed for a short period of time.Transient storage opcodes allow smart contracts to use a memory-like storage space when processing data.This storage space is different from permanent storage because its contents are cleared after each transaction is completed, just like the contents on the temporary notepad are wiped off after they run out.It has the following characteristics:
•Temporary:Values in transient storage are discarded after each transaction and will not be saved for a long time.
• Performance Advantages:Because disk access is not required, it is cost-effective to use.
• Support smart contract access:Smart contracts can access instantaneous storage through two new opcodes, which means that the contract can read and write these temporary data.
• Convenience:When using transient storage, the client does not need to pay Gas in advance to load the raw data, nor does it need to clean the storage slot after use, which makes the whole process more efficient and cheap.
(2) EIP-4788: The beacon block root in the Ethereum virtual machine helps the Ethereum virtual machine (EVM) interact with the consensus layer more securely. EVM can directly access and verify these without relying on external trust sources.Data improves the security and reliability of the system.This function supports the following application scenarios:
a. Pledge pool.Staking pools can more reliably verify the number and status of participants’ tokens, reducing the likelihood of fraud and error.
b. Re-pled.The relevant data can be directly verified, and the process of changing the staking settings will be smoother and safer.
c. Cross-chain bridge.Smart contract bridges can more effectively verify transactions and states, thereby improving the security of cross-chain interactions.
d.MEV relief.MEV (Miner Extract Value) is a means of profiting from it by optimizing the order of transactions during block construction.Using beacon block roots, more effective strategies can be designed to reduce the impact of MEVs and make transactions more fair and transparent.
(3) EIP-5656: MCOPY, is an efficient EVM (Ethereum Virtual Machine) instruction used to copy memory areas.It can be found in Solidity, Vyper, and Fe compilers for precise word memory copying and partial word memory copying.EIP-5656 helps to improve the performance of the Ethereum network, especially in smart contract execution, by introducing MCOPY opcodes.This is an important improvement for developers as it allows them to create more efficient and fast smart contracts, reducing the overhead of calling identity precompilation from 700 Gas to 100 Gas.
(4) EIP-6780: Used to remove the SELFDESTRUCT opcode.In the original design, the SELFDESTRUCT function of the Ethereum smart contract is implemented by calling a special opcode.When the smart contract calls SELFDESTRUCT, the code in the contract is destroyed and the remaining Ether and storage space will be sent to the specified address.
The original intention of this function is to clean up when the contract is executed or there is a serious error.
When a smart contract is no longer needed, self-destruction can free up storage space and send the remaining Ether to the specified address, thus avoiding wasting resources.Using SELFDESTRUCT deletes all code and storage information for the account.But in the design of future Verkle tree, this operation will no longer be possible.Because in future designs, the information of each account will be scattered in many different account keys, and there is no obvious connection between these account keys and the root account.The adoption and implementation of the EIP-6780 proposal will help improve the security of the Ethereum network and prevent the risk of capital losses caused by self-destruction of contracts.
(5) EIP-7044: A proposal to improve the Ethereum staking exit mechanism.The main purpose of this proposal is to simplify and improve the exit mechanism for Ethereum staking, so that voluntary exits signed before Capella upgrades can be permanently valid.Such improvements can ensure that staking operations are safer and improve user experience.By implementing EIP-7044, the Ethereum network can better handle validator and staking-related operational processes, thereby enhancing the stability and reliability of the entire network.
(6) EIP-7045: An Ethereum improvement proposal for network proof slots, which improves the security of the Ethereum network and the speed of transaction confirmation by increasing the number of proof-containing slots.Proof Slot is a concept in the Ethereum protocol, which is closely related to the behavior of the validator and the security of the network.By expanding the scope of the proof slot, the network’s ability to process a large number of validators can be improved, while also enhancing the security of the entire network.
(7) EIP-7514: An improvement proposal for the growth method of Ethereum staking validators, which changes the growth method of the maximum number of validators from exponential growth to linear growth, and by setting a fixed maximum churn limit (maximum)Churn limit), limits the number of validators entering or leaving the network during each epoch period, in response to the rapid growth of Ethereum staking.The proposal is intended to mitigate the very high negative externalities of the total supply of ETH staking before implementing the appropriate solution.
(8) EIP-7516: An improved proposal to reduce the cost of data usage, allowing users to programmatically calculate the cost of blob data usage.The advantage of this is that users can calculate and use data according to their actual needs, thereby reducing the cost of data use.In addition, the concept of Blob Gas futures is also mentioned in the proposal.Blob Gas Futures is a financial tool that users can lock in future Blob data usage costs, thereby eliminating the risks caused by fluctuations in data usage costs.
Competition may just begin
Although Ethereum has reduced Gas fees through its Dencun upgrade, its solutions still face challenges such as network fragmentation and user experience issues.These challenges may continue to limit Ethereum’s ability to attract small transactions.
From an economic perspective, the average cost of NFT transactions on the Ethereum platform is about $140, which is usually a relatively high expense for users, especially when the transaction fees exceed the value of the NFT itself.Therefore, high transaction fees drive users to explore more cost-effective alternatives.
For example, Solana, a Layer 1 blockchain, whose transaction fees are much lower than Ethereum, with an average transaction cost of only 0.000036 SOL, which is equivalent to about 0.0047 US dollars.This significant cost advantage has attracted many users who want to reduce their spending, especially those who frequently trade NFTs.
Furthermore, as smart contracts become more complex, ensuring their security and reliability is gradually becoming an ongoing challenge.Malicious behavior or programming errors can lead to significant security incidents.
The challenge of the crypto world is continuous, but the Dencun upgrade is only temporary.As Vitalik said, Ethereum requires three key technology transitions to enable an open, global and license-free experience.Now, everything has just begun.
