Ethereum‘s much-anticipated Dencun upgrade, which made its debut on an Ethereum testnet last week, is gearing up for its mainnet release. The same is expected to happen in the first quarter of 2024.
The blockchain’s core developers recently confirmed that the upgrade is proceeding as planned. A blog post from the Ethereum Foundation detailed that the next phases, involving the Sepolia and Holesky testnets, are set to be completed early next month.
The Sepolia testnet, a sandbox for testing decentralised applications (dApps), smart contracts, and Ethereum Virtual Machine (EVM) functionality, and Holesky, slated to replace Goerli, are scheduled for upgrades on 30 January and 7 February, respectively.
These steps are crucial in Ethereum’s journey towards becoming a faster and more cost-effective platform.
A leap in Ethereum’s scalability
The Dencun upgrade is a significant milestone for Ethereum, aimed at addressing the blockchain’s scaling challenges.
Ethereum, the foundation of the second-largest cryptocurrency by market capitalisation, $ETH, has been hindered by a congested network. This has led to high costs and inefficiencies for users and developers.
However, the upcoming upgrade, featuring proto-danksharding (or EIP-4844), is set to revolutionise this. It promises to enable the network to process over 100,000 transactions per second affordably.
This enhancement will significantly reduce the cost of Ethereum layer-2 solutions like Optimism, which are crucial for offloading transactions from the main Ethereum blockchain.
According to a report by Messari, most of Ethereum’s activities occur on these layer-2 solutions, which operate alongside the main network for faster transaction processing.
Overcoming initial hurdles
Dencun’s initial testnet launch was not without its challenges, including issues with achieving finality and a chain split.
These problems were attributed to low validator participation and a bug in Prysm nodes, respectively. However, these issues were swiftly resolved, and the network resumed finalising transactions.
Finality is crucial in the crypto world, ensuring that transactions are irreversible once executed.
Despite these early setbacks and concerns about the upgrade’s timeline, the Ethereum Protocol Support team’s recent announcement has reassured the community that the Dencun upgrade is on track.
Ethereum’s journey has been marked by several significant upgrades aimed at improving scalability, security, and sustainability.
Notable among these is the transition from the original proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS) in Ethereum 2.0. This move was designed to drastically reduce the network’s energy consumption and increase transaction throughput.
Previous upgrades like Constantinople and Istanbul have incrementally improved Ethereum’s functionality and efficiency. These upgrades addressed issues such as network congestion and high gas fees, which had become pain points for users and developers.
Each upgrade brought Ethereum closer to its vision of a more scalable, secure, and sustainable blockchain, setting the stage for the upcoming Dencun upgrade.
Ethereum’s market performance
At the time of writing, Ethereum’s ($ETH) market performance reflected the broader market downturn.
Its price hovered around $2,212, which is a more than 10% decline over the week. Technical indicators, including the Moving Average Convergence Divergence (MACD) and Awesome Oscillator, showed bearish trends with red histograms.
The MACD experienced a bearish crossover, while the Bollinger Bands indicated stable price volatility, moving parallel to each other.
Ethereum’s next significant resistance level is anticipated around the $2,300 mark.