How the Ethereum Cancun Upgrade Reshapes Scalability: From Technical Breakthroughs to Real-World Applications

Key Points

• On March 13, 2024, Ethereum implemented the Cancun-Deneb upgrade on the mainnet, which is a key milestone in the Ethereum 2.0 roadmap introducing Proto-Danksharding.
• The upgrade significantly reduces Layer 2 transaction costs and enhances network throughput through four Ethereum Improvement Proposals: EIP-4844, EIP-1153, EIP-4788, and EIP-6780.
• Proto-Danksharding introduces the Blob data structure, allowing Layer 2 Rollups to store temporary data at a lower cost, pushing TPS (transactions per second) towards the level of 100,000.
• The main risks associated with the upgrade include compatibility issues with existing smart contracts and challenges in integrating new data storage technologies.

From Proof of Work to Proof of Stake: Solidifying the Foundation of Ethereum's Scalability

The transition of Ethereum to the Proof of Stake (PoS) mechanism is not just an update of the consensus algorithm, but a necessary foundation for paving the way for subsequent Sharding technology. In the PoW era, miners competed for accounting rights through computing power; whereas in the PoS system, validators are randomly assigned to different Shard segments based on the amount of ETH staked.

The brilliance of this design lies in the fact that the random allocation mechanism significantly reduces the likelihood of shard attacks, while also allowing verification work to be distributed across multiple parallel shards, enabling the entire network to process multiple times the number of transactions simultaneously. Compared to the inefficiency of Proof of Work, which requires the entire network to participate in calculations, Sharding in a PoS environment can achieve true parallel processing.

The Cancun Era After the Ethereum Shanghai Upgrade

If the Shanghai upgrade laid the foundation for staking, then the subsequent Cancun upgrade represents a systematic transformation of network efficiency. The Cancun-Deneb upgrade (also known as Dencun) did not appear out of nowhere, but was carefully designed based on four specific Ethereum Improvement Proposals (EIPs):

Interpretation of Core Improvement Proposal ###

EIP-4844: Implementation of Proto-Danksharding This is the most revolutionary of the four proposals. It introduces the concept of “Blob” (Binary Large Object) – a temporary data storage structure that can be automatically cleaned up after existing in a block for about 18 days. For Layer 2 Rollups, this means they do not need to permanently store all transaction data on the Ethereum main chain, but can instead utilize inexpensive temporary storage space. What’s the result? Gas fees on Layer 2 can decrease by 50%-90%.

EIP-1153: Optimization of Short-Term Storage This proposal reduces the Gas consumption of contracts in storage operations by introducing a transient storage mechanism that allows smart contracts to temporarily store data within the same transaction without the costly permanent storage operations.

EIP-4788: Bridging Cross-Chain Communication This proposal directly exposes the status of the beacon chain to the execution layer, laying the foundation for more complex cross-chain interactions in the future and enhancing the interoperability of Ethereum with other blockchain networks.

EIP-6780: Strengthening Smart Contract Security By limiting the use cases of the SELFDESTRUCT opcode, the risk of malicious contract destruction is reduced, enhancing the security of user funds.

Progressive implementation of Danksharding

Danksharding, a concept proposed by Ethereum researcher Dankrad Feist, represents the sharding solution for the final phase of Ethereum 2.0 (Serenity). Unlike traditional sharding, which assigns independent block producers for each shard, Danksharding only requires a single block proposer, optimizing data availability through a simplified architecture.

Proto-Danksharding is a prototype implementation of this vision - it retains the key features of Danksharding but adopts a smoother transition. With the introduction of the Blob data structure, Layer 2 applications can immediately benefit, while the complete Danksharding framework continues to be developed.

How Blob Transactions Are Changing the Ecosystem ###

Blob transactions are a direct product of Proto-Danksharding. Traditional Ethereum transactions require all data to be permanently recorded on the blockchain, leading to exponentially rising storage costs as the network grows. In contrast, Blob transactions allow large amounts of data to be attached to transactions as temporary data packets, which are cleared after verification, significantly reducing the cost pressure on developers.

For Layer 2 Rollups (such as Arbitrum, Optimism, etc.), this means they can batch submit transaction proofs on Ethereum at a lower cost, and end users benefit from significantly reduced Gas fees.

Five Actual Impacts of Cancun Upgrade on Ecology

1. Scalability Enhancement Proto-Danksharding achieves a qualitative leap in the throughput of Layer 2 Rollups by introducing temporary data storage. The target of 100,000 TPS proposed in Ethereum's official “Surge” roadmap becomes more attainable.

2. Significant decrease in user costs The cost curve for Blob data is completely independent of regular Gas fees and is generally cheaper. This directly translates to a 50%-90% reduction in Gas fees for Layer 2 users, and in some periods, it can be even lower.

3. Intelligent Management of Data Storage The temporary storage mechanism of EIP-1153 provides smart contract developers with more flexible storage options—there is no longer a need to pay the high cost of permanent storage for data that only needs to be saved temporarily.

4. Strengthening Interoperability of Cross-Chain Ecosystem EIP-4788 provides a better technical foundation for subsequent cross-chain bridging and multi-chain applications by opening the beacon chain state to the execution layer.

5. Security Upgrade of the Smart Contract Ecosystem EIP-6780 restricts the abuse of SELFDESTRUCT, reducing certain known contract vulnerability attack vectors, protecting user assets while also lowering audit costs.

Real Challenges Faced in Upgrading

Although the prospects for the Cancun upgrade are bright, its implementation is not without risks. Firstly, some outdated smart contracts may face compatibility issues with the new Gas calculation methods or storage mechanisms, requiring proactive adaptation from project teams. Secondly, while the new Blob data structure is more efficient, it also necessitates corresponding updates and optimizations to node software, which poses technical requirements for network node operators.

In addition, complete Danksharding is still under development. While Proto-Danksharding has brought immediate benefits, the final implementation still requires careful testing.

Upgrade Timeline and Implementation Progress

The Cancun upgrade was originally scheduled to go live in October 2023, but it has been postponed to the first half of 2024 to ensure sufficient testing and auditing. Ultimately, the upgrade was officially implemented on the Ethereum mainnet on March 13, 2024 (Validator Set Epoch 269,568).

Node operators and stakers need to timely update their client software versions to ensure compatibility with the upgraded network.

Outlook: A New Era of Ethereum Scalability

The Cancun-Deneb upgrade represents a key turning point for Ethereum as it transitions from theoretical design to practical usability. With the introduction of Proto-Danksharding, the Layer 2 ecosystem has gained breathing room, significantly reducing user costs and greatly improving the user experience for DeFi and NFT applications.

The deeper meaning lies in the fact that the Cancun upgrade has validated the feasibility of Ethereum's sharding vision, laying a solid foundation for the eventual realization of Danksharding. In the future, when the complete sharding plan is in place, Ethereum is expected to break through the performance ceiling of 100,000 TPS, truly becoming a reliable support for global financial infrastructure.

The significance of this upgrade is evident for developers, stakers, and regular users - lower fees, faster speeds, and a better experience. This is also the key for Ethereum to maintain its lead in competition with other high-performance public chains.