Ethereum in March 2024: How the Dencun Upgrade Changed the Future of Blockchain

Ethereum Network entered a new era on March 13, 2024, with the launch of the long-awaited Cancun-Deneb upgrade. This is not just another technical improvement — it’s a significant step toward transforming Ethereum into a truly scalable system. At the heart of this transformation is a mechanism known as Proto-Danksharding (described in EIP-4844), which fundamentally changes the way data is processed on the network.

Why was this change necessary in the first place?

For traders or those interacting with Ethereum, the story is simple: fees were high, and throughput was limited. At the time of the upgrade announcement, the average fee for simple transfers in Layer-2 solutions was $0.24 on Arbitrum, $0.47 on Optimism, and $0.78 on Polygon. It was painful.

The Dencun upgrade addressed this issue by introducing so-called “blobs” — temporary data packets processed differently from traditional transaction data. EIP-4844 allowed second-layer networks (Layer-2) to utilize this cheaper method of storing information. The result? Layer-2 fees dropped by 10-100 times.

How exactly is the Dencun upgrade structured?

The upgrade affected two key components of the network. The Cancun part focuses on the data availability layer, where the main innovation with blobs is implemented. The Deneb part improved the consensus layer by incorporating several additional optimizations.

In addition to Proto-Danksharding, the upgrade includes several less noticeable but significant improvements:

• EIP-1153 reduced smart contract execution costs through more efficient temporary storage
• EIP-4788 linked the consensus layer directly with the execution layer, removing unnecessary intermediate steps
• EIP-5656 added the MCOPY opcode for fast memory copying
• EIP-6780 restricted the dangerous SELFDESTRUCT opcode to enhance security
• EIP-6493 slightly reworked the validator voting mechanism

Deployment timeline: how it unfolded

Developers tested the upgrade in stages:

• January 17 — initial tests on Goerli
• January 30 — testing on Sepolia
• February 7 — final test on Holesky
• March 13 — full mainnet launch

Initially, the upgrade was planned for late 2023, but developers decided to wait until full readiness.

What changed for regular users?

Most importantly — fees. Predictions promised a 10-100x reduction for Layer-2 transactions. In practice, the effect was significant, although specific numbers varied depending on network load.

Beyond fees, the upgrade paved the way for three important changes:

Explosive growth in throughput. Theoretically, Ethereum could increase from ~15 transactions per second to 1000 TPS thanks to more efficient data processing. That’s a huge leap.

Stability of the second layer. Layer-2 networks gained the ability to handle larger data volumes more cheaply, allowing them to compete with other scalability solutions.

New opportunities for developers. The expanded storage capacity (1 MB of data per slot thanks to blobs) enabled the creation of more complex applications.

Impact on Layer-2 (Layer-2)

Layer-2 networks are the main beneficiaries of the Dencun upgrade. These systems process transactions off the main chain and then send summaries to Ethereum. The problem was the high cost of this “finalizing” step.

Proto-Danksharding via EIP-4844 solved this problem by providing a cheaper way to store this data. In practice, this means:

• Lower costs for bridge operations between layers become more economical
• Increased competitiveness of Layer-2 solutions against each other, benefiting users
• Scalability without compromising security, as data remains accessible on the network

According to reports, Layer-2 accounted for about 10% of mainnet fees, but this share significantly decreased after the upgrade due to a sharp drop in transaction costs.

Risks and potential issues

Despite optimism, the upgrade carried risks:

Technical vulnerabilities — the new blobs mechanism required thorough auditing and testing. Potential bugs could lead to instability.

Compatibility issues — old smart contracts and decentralized applications might face unexpected problems when interacting with the new mechanism.

Transition period — immediately after activation, fees could fluctuate as the system adapted to the new equilibrium.

This is just the beginning: Ethereum’s roadmap

The Dencun upgrade is not the final scaling solution for Ethereum. It’s a transitional phase.

Proto-Danksharding paves the way for full Danksharding — a system that will split Ethereum into multiple independent shards, each processing its own transactions. This will radically increase throughput.

After Dencun, the community is looking forward to the next major upgrade Petra (Electra + Prague), which involves implementing Verkle Trees — an innovative data structure for even more efficient data storage.

Ethereum’s full 2.0 roadmap includes:

1. Beacon Chain (2020) — launch of the Proof-of-Stake system
2. The Merge (2022) — switching the mainnet to PoS
3. Shanghai/Capella (2023) — enabling ETH staking withdrawals
4. Dencun (2024) — implementing Proto-Danksharding
5. Petra (planned) — Verkle Trees and further improvements

Summary for traders and investors

The Ethereum Dencun upgrade in March 2024 marked a turning point for the ecosystem. For traders, this meant:

• Sharp reduction in operation costs in Layer-2
• Greater growth potential for decentralized applications thanks to improved scalability
• New opportunities for strategies involving liquid staking of ETH

The cryptocurrency market received a technological foundation for further development. Ethereum continues to evolve from a high-fee platform into a system capable of competing with centralized financial networks in speed and cost.

The path to full Danksharding continues, and each update brings Ethereum closer to its goal: making truly decentralized finance accessible to millions worldwide.