Developers at the Ethereum (ETH) team recently gave a major update about the next big thing on the blockchain network.
The Cancun-Deneb upgrade went live on the testnet on January 17th, 2024.
Dencun stands for Cancun and Deneb, two upgrades scheduled to occur simultaneously.
While the Cancun upgrade will take place on the execution layer, the Deneb upgrade will take place on the consensus layer.
For beginners, the execution layer is where smart contracts and network rules lie, and the consensus layer is where blocks are generated.
Dencun is a part of a series of upgrades along Ethereum’s roadmap from Merge to Surge. It is the first major upgrade on the Ethereum network since the Shapella upgrade that was implemented in April 2023
Learn more about Ethereum Upgrade Roadmap here.
It was initially scheduled for the last quarter of 2023 but had to be rescheduled due to complex developmental aspects.
The Dencun upgrade aims to improve the Ethereum network in the following ways:
ETH was already rallying north of $2,200 when the announcement about the upgrade was made. It seems that the news only pushed its price upwards.
ETH is trading at $2,260.7 at the time of writing.
The Dencun upgrade is expected to reduce gas fees and make additional space on the Ethereum network. The development could significantly enhance the scalability of the network among L-2s.
The news is likely to instil more trust within the Ethereum community. L-2 rollups such as Arbitrum, Base, and Polygon zkEVM are certain to benefit from the upgrade.
Moreover, it could potentially invite more users and projects to adopt the upgraded Ethereum network.
However, observers should refrain from overestimating the significance of the Dencun upgrade. Though it is also a major upgrade, it shouldn't be compared to the Merge at all. The latter transformed the Ethereum network from a proof-of-work blockchain into a proof-of-stake blockchain.
The Merge was the biggest and most crucial upgrade that has occurred on the network so far. Dencum, though significant, is only one of the several upgrades along the network’s roadmap to be able to execute 100,000 transactions per second (TPS).
Therefore, we shouldn't expect too much of the Dencun upgrade. However, it doesn't mean it’s inconsequential even if it’s impact would not be monumental.
Market analysts believe that the Dencun Upgrade, in tandem with the potential approval of spot ETH exchange-traded fund (ETF) applications, could drive ETH’s price up significantly.
Additionally, it could also lead to a price rally across L-2 tokens as they are to gain significant traction following the upgrade.
BitDelta traders are recommended to educate themselves about the impact of the Dencun upgrade on the Ethereum network. Such developments often lead to significant price movements of a cryptocurrency.
Traders should follow trusted resources such as BitDelta Academy to be acquainted with the latest market trends.
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This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.