Written by: Azuma, Odaily Planet Daily
Later today, Ethereum is expected to officially activate the Dencun hard fork upgrade at Beacon Slot 8626176.
The so-called Dencun upgrade is actually a general term for the two upgrades, Deneb and Cancun. The former is aimed at the consensus layer, and the latter is aimed at the execution layer. The Chinese translation of Cancun is the "Cancun Upgrade" that the Ethereum community has been looking forward to for a long time.
Before the official launch of the mainnet, Ethereum core developers and major client teams have deployed the Dencun upgrade on Devnet, Goerli testnet, Sepolia testnet, and Holesky testnet in the past few months to test and observe the upgrade and subsequent network operation.
Upgrade content: a total of nine EIPs, with a focus on EIP-4844
According to the Ethereum Foundation, this Dencun upgrade will implement a total of nine EIPs (Ethereum Improvement Proposals), specifically:
EIP-1153: About transient storage opcodes;
EIP-4788: About the beacon block root in EVM;
EIP-4844: About Shard Blob Transactions;
EIP-5656: About MCOPY, the memory copy instruction;
EIP-6780: Regarding SELFDESTRUCT in the same transaction;
EIP-7044: Regarding permanent and effective voluntary withdrawal signatures;
EIP-7045: About adding the maximum time slot included in the proof;
EIP-7514: About adding a maximum Epoch loss limit;
EIP-7516: About the BLOBBASEFEE opcode.
For readers who are not familiar with Ethereum development terminology, you do not need to understand the specific content of each of the above EIPs. You only need to focus on the most important update of this Dencun - EIP-4844.
EIP-4844, also known as Proto-Danksharding, is the front-end solution of Danksharding, the current mainstream sharding idea in the Ethereum community. The main content of EIP-4844 (Proto-Danksharding) is to introduce a new transaction type "Blob transaction" to Ethereum, by adding an additional temporary data space Blob to the block on the Ethereum main network, specifically for Process Layer 2 related transactions, thereby significantly reducing Layer 2 transaction fees.
Micro Analysis: How does Blob affect Layer 2 transaction costs?
Earlier this week, Ethereum core developer eric.eth posted on the X platform that the implementation of EIP-4844 "will reduce Ethereum transaction fees to $0.01" - eric.eth later admitted that this statement was a misleading statement, and what it meant was that the gas cost of Ethereum Layer 2 transactions would be reduced to around $0.01.
So, how does "Blob Transaction" help Layer 2 to reduce costs and increase efficiency? After the upgrade, can the transaction cost of the Layer 2 network really be reduced to an extremely low level of $0.01?
To answer these questions, we first need to focus on the operating mechanism of Layer 2. Whether it is Optimistic Rollup or ZK Rollup, as long as Layer 2 relies on the Ethereum mainnet as the DA layer in a narrow sense, it will follow the following operating mode - Layer 2 needs to write its transactions, proofs and execution results into the calldata data space in the Ethereum mainnet, thereby passing its historical records to Ethereum, relying on the latter to ensure the decentralization and security of the network.
This data synchronization mode that relies on calldate has been running stably for a long time, but there has always been a more serious problem - the calldate write transactions submitted by Layer 2 need to compete in the same fee market with all transactions on the Ethereum mainnet, which will cause the transaction costs of Layer 2 to be significantly affected by the gas conditions of the Ethereum mainnet.
In order to ensure that calldate write transactions can be successfully executed on the Ethereum mainnet, Layer 2 will pass this part of the fee on to users who execute transactions on Layer 2. Currently, the cost of calldate write transactions accounts for the vast majority of Layer 2 transaction costs, which is why users generally feel that the current Layer 2 transaction costs are still too expensive.
After EIP-4844 is implemented, Ethereum will add an additional data space Blob to the block, which is specifically used to handle Layer 2 related transactions. At that time, Layer 2 will no longer need to write data into the calldate space, but will instead use the Blob space to complete data synchronization operations. In addition, Layer 2 related transactions will be distinguished from other Ethereum mainnet transactions as two independent fee markets, and they will no longer interfere with each other.
It is worth mentioning that in order to prevent the additional addition of Blob data space from placing too much burden on the Ethereum mainnet node, the data in the Blob will be cleared regularly, which also means that there will be some new changes in the historical data storage mechanism of Layer 2 in the future.
Combined with the above analysis, it can be expected that after the implementation of EIP-4844, the data synchronization cost of the Layer 2 network will be greatly reduced, thereby indirectly reducing the transaction costs of users on the Layer 2 network; in addition, as the block space originally occupied by Layer 2 is released (transferred to Blob), the fee competition pressure faced by other Ethereum mainnet exchanges will also be alleviated, so EIP-4844 will also reduce the transaction fee cost of the Ethereum mainnet to a certain extent.
As for the extent to which the transaction costs on the major Layer 2s will be reduced after the upgrade is completed, Optimism has launched a website called welovetheblobs, which is used to intuitively query the fee changes of various operations. For example, the transaction cost of executing a swap on Velodrome will be reduced from the real-time US$0.52 to US$0.03.
Positive targets: What else are there besides Layer 2?
For investors, in addition to understanding the content and function of the Dencun upgrade, the most interesting topic is which potential targets will benefit from this upgrade.
First of all, the Dencun upgrade will naturally directly benefit the entire Layer 2 sector. According to L2 BEAT data, there are currently 45 Layer 2s in operation, and 34 Layer 2s to be launched on the mainnet, including Optimism (OP), Arbitrum (ARB), Starknet (STRK), Metis (METIS), Manta Pacific (MANTA) and other projects that have already issued tokens, as well as zkSync, Blast, Linea, Scroll and other unissued projects.
With the Dencun upgrade, especially the implementation of EIP-4844, the above projects and more Layer 2s that have not been mentioned will achieve significant "cost reduction and efficiency improvement", allowing the Layer 2 network to eliminate the disadvantages in transaction costs compared to low-cost Layer 1s such as Solana. In the long run, the reduction in transaction friction will help major Layer 2s attract and retain more users, and also help attract more developers to conduct multi-faceted development attempts, thereby continuously improving the vitality of the ecosystem.
Among the many Layer 2s, zkSync may need special mention, because zkSync founder Alex Gluchowski once mentioned that a new expansion solution zkPorter will be launched after the implementation of EIP-4844, and zkPorter needs to rely on zkSync's native token to ensure data availability, which may mean that zkSync should not be far from issuing coins.
In addition to directly benefiting Layer 2, the Dencun upgrade will also indirectly benefit some other related fields and tracks.
For example, games and social networking on Layer 2 with "high concurrency requirements" and "low unit value" attributes may usher in a window of accelerated growth. At present, due to the problem of still high cost, the mainstream application types on Layer 2 are still "low concurrency requirements" and "high unit value" projects represented by DeFi, because only such projects can achieve ideal economic effects at higher cost. With the advent of Dencun upgrade, this situation may also usher in changes.
Furthermore, storage-based projects may also see some development opportunities due to changes in Layer 2’s storage requirements for transaction history. Since Blob does not permanently store data like calldate, Layer 2 needs to find other ways to store historical transaction data for a long time. New requirements are new opportunities.
In addition, if Layer 2 can further win market consensus after reducing transaction costs, RaaS-type "water delivery" services may also usher in more demand for use, but this is a relatively long-term topic.
In summary, as the Dencun upgrade gradually becomes a reality, the overall fundamentals of the Ethereum ecosystem will surely see significant improvements, and this benefit will also radiate to all components within the Ethereum ecosystem.
In the short term after the upgrade is completed, users may not have any other obvious perceptions except for the reduction in Layer 2 fees, but in the long run, the potential ecological vitality that the Dencun upgrade itself can bring and its role as a foundation for subsequent upgrades will undoubtedly push Ethereum into a new stage of development.
