The Dencun Upgrade has been successfully launched on Ethereum Mainnet at March 13, 2024, 1:55:35 PM +UTC, or at epoch 269,568. This major software update on Ethereum aims to enhance Ethereum network, which will reduce the operational costs on Layer 2s such as Arbitrum, Starknet, and Zk Sync.

What is Dencun Upgrade?

‘Dencun’ = ‘Deneb’ + ‘Cancun’

Dencun upgrade is the two upgrade events(Cancun and Deneb Upgrade) that is carried out simultaneously on Ethereum. Hence, Cancun upgrade of the execution layer and Deneb upgrade on the consensus layer has been combined, and Dencun Upgrade is named after the two events.

Deneb Upgrade (Improve security & consensus) — The enhancement on the consensus layer, to introduces a more robust and efficient enhancement to the Ethereum Proof-of-Stake (POS) consensus algorithm.

Cancun Upgrade (Improves scalability) — The enhancement on the execution layer, which aims to optimise gas efficiency and scalability.

EIP-4844 (Proto-danksharding)

Amongst all the proposals in Dencun Upgrade, EIP-4844, also known as proto-danksharding, is the most crucial improvement proposal to the Ethereum protocol that aims to reduce the transaction gas fees, by increasing transaction throughput. This is achievable by introducing ‘blobs’ space, which is a pure data available space on Ethereum. This upgrade is very crucial for L2s, as the upgrade will directly affect the gas price on their respective chains. But how does it achievable?

How does EIP-4844 affect Layer 2?

The reason behind each Layer 2 offering low gas fee for each transactions, is via rolling up a bunch of transactions happened on its particular blockchain, and anchoring back to Ethereum Network to inherit the security of Ethereum. Hence, Layer 2 solutions is solving the congestion issue in Ethereum, and the solutions are more economical, compared to Ethereum. What all these Layer 2 needs, are places to store these data. This is where they can take all the transaction data from their blockchain, compress the data, and store the proof on Ethereum.

Previously, if the layer 2s wanted to publish the data on Ethereum, the data will be published and stayed on chain forever. So before the update, these layer 2s pay for the data storage for infinite duration. However, the layer 2s will only require the data storage for a couple of weeks for the blockchain to verify that every proof is valid.

The Dencun Upgrade introduced a new type of data, called ‘blobs’. Which is designed for the Layer 2, to allow the Layer 2s to pay the storage for a duration of couple of weeks, compare with call data (previous data type), this makes the cost of storage cheaper. The huge reduction in blockchain operational cost will be directly reflected on the users’ transaction, they will be facilitated with lesser gas fee.

source: @Marcov, Dune Analytics

source: @hildobby, Dune Analytics

The Long-term Plan of Ethereum

The Ethereum Roadmap

Ethereum maintains a structured framework for its regular upgrades, meticulously crafted to bolster its scalability, security, and sustainability. A fundamental pillar of the Ethereum ecosystem lies in its adaptability, enabling it to swiftly address emerging challenges and integrate state-of-the-art technological innovations. Central to this process is the collective input from a diverse array of stakeholders, primarily researchers and developers, who dedicate extensive effort to charting the platform’s trajectory towards continuous improvement.

The genesis of these upgrades often traces back to deliberations held within prominent forums such as ethresear.ch, Ethereum Magicians, or the Eth R&D discord server. These digital spaces serve as incubators for ideas, fostering discussions that are inherently responsive to the evolving landscape of vulnerabilities, user experience frictions, and the evolving needs of application layer entities like decentralised applications (dApps) and cryptocurrency exchanges. Such engagements provide the fertile ground upon which novel concepts germinate, ripe for exploration and refinement.

As these discussions mature and coalesce around promising avenues of development, proposals begin to take shape, eventually manifesting as Ethereum Improvement Proposals (EIPs). This pivotal stage marks the formalization of ideas into actionable directives, encapsulating the collective wisdom gleaned from the vibrant discourse within the Ethereum community. Importantly, the process of drafting and deliberating upon EIPs unfolds transparently, inviting active participation from stakeholders across the Ethereum ecosystem.

The open nature of this process underscores Ethereum’s commitment to inclusivity and democratic governance, ensuring that voices from all corners of the community are heard and considered. Indeed, the dynamism inherent in Ethereum’s development landscape is testament to the platform’s resilience and adaptability, traits that are indispensable in navigating the ever-evolving terrain of blockchain technology. In essence, Ethereum’s approach to upgrades stands as a testament to its ethos of collaborative innovation, heralding a future where the platform continues to evolve in lockstep with the needs and aspirations of its global user base.

What’s Next after Dencun Upgrade?

For Ethereum, it is significant to keep an eye and monitor what are the next big major upgrade or hardfork for the network. According to Ethereum Foundation, the Ethereum roadmap has displayed several plans on what are the directions in order to achieve the few pillars that they would like to enhance.

Secret Leader Election

Secret Leader Election (SLE) protocol to prevent potential denial-of-service attacks targeting block leaders. This involves exploring options such as Single SLE or Non-Single SLE, where the leader of a slot remains unknown until they reveal themselves, thus enhancing security.

Single Slot Finality

Single Slot Finality (SSF) aims to finalize the chain every slot (12 seconds) instead of every other epoch (12.8 minutes). Achieving this requires innovations like Per-slot participation selection and SSF specification, which are essential for improving scalability and transaction finality.

Increase validator count

Additionally, increasing the validator count is a priority post-SSF, aligning with advancements in hardware and bandwidth capabilities to bolster network participation and security.

Quantum-safe aggregation-friendly signatures

Ethereum is actively pursuing quantum-safe aggregation-friendly signatures to safeguard against future threats posed by quantum computers. While the BLS signature scheme currently used is vulnerable to quantum attacks, alternatives like STARK-based or Lattice-based approaches offer promising avenues for achieving both quantum-resistance and efficient aggregation, ensuring the long-term security and viability of the Ethereum network. Overall, these efforts demonstrate Ethereum’s commitment to continuous improvement and future-proofing against emerging threats.

Some key takeaways on the Feynman upgrade as mentioned in the tweet by BNB Chain yesterday:

1. To enhance the security and efficiency, transition to Path-Based-Storage-Scheme (PBSS) from hash-based mode is crucial.

2. Validators can now be directly created on BSC, facilitating a seamless migration from the Beacon Chain to BSC; which helps to simplifies the validation process and bolsters BSC’s security and governance.

3. The Feynman upgrade introduces BEP-294, BEP-297, and BEP-299, to make enhancement in voting power, governance functionality, and token migration mechanisms.

Why is Feynman Upgrade crucial in BNB Chain?

According to the roadmap of BNB Chain Fusion, it is a strategic shift to move the features of the Beacon Chain to BNB Smart Chain (BSC) and eventually retire the Beacon Chain. This change aims to make the network simpler, faster, and safer, while also keeping up with the latest technology and preparing for future growth. In BNB Chain Fusion, there are several stages to retire the Beacon Chain, which are:

1. First Sunset Fork

2. BSC Feynman Hardfork

3. Migrate voting power

4. Second Sunset Fork

5. Final Sunset Fork

6. Post BC Fusion

In Feynman Hardfork (Stage 2), Native validators and staking, native goverenance will be enabled on BNB Smart Chain. The BSC validators/delegators can start migrations after the Feynman upgrade, which BNB Chain estimate to launch on Mainnet in April 2024. Feynman Upgrade introduces 3 Binance Smart Chain Evolution Proposal (BEP) — BEP294, BEP297, and BEP299.

Source: BNB Chain Documentation, BNB Chain

What is BEP294, BEP297, and BEP299?

The introduction of all three proposals (BEP294, BEP297, and BEP299) represents the framework to achieve a strategic shift to migrate the Beacon Chain’s functionalities to BSC and retire the Beacon Chain. The Feynman Upgrade will enhance its efficiency, reduce security risks, and align the BNB Chain’s architecture with current technological demands and future growth.

BEP294: BSC Native Staking after BC Fusion

BEP294 introduces a Native Staking module to BNB Smart Chain, shifting staking operations from the BNB Beacon Chain to BSC. This allows BNB holders to stake their tokens with specific validators and receive staking rewards directly on BSC. Upon staking, delegators receive staking credit tokens, which serve as proof of their stake. These tokens represent the initial deposit plus any staking rewards earned. Staking credit tokens are created when tokens are delegated and destroyed when tokens are not delegated.

BEP297: BSC Native Governance Module

BEP297 introduces Native Governance to BNB Smart Chain, moving governance decisions from the BNB Beacon Chain to BSC. This means community members can now submit and vote on proposals directly on the BSC network. If a proposal is approved, it will be implemented automatically on the chain or manually off-chain. This change aims to make governance more accessible and efficient for stakeholders.

BEP299: Token Migration after BC Fusion

After the Beacon Chain fusion, some digital assets may remain on the Beacon Chain. BEP299 offers a secure and trustless method for users to recover these assets on the BSC once the Beacon Chain stops running. Users are advised to transfer their assets to other networks through cross-chain transactions before the Beacon Chain discontinues operations. Once operations cease, a snapshot of users’ assets on the Beacon Chain will be taken and publicly released by the community team. A Merkle tree will then be generated based on this snapshot, with its root stored in the system contract of the BNB Smart Chain (BSC).

Feynman Upgrade: Who Benefits from the Upgrade?

During the Feynman hardfork, the function to activate the validators creation function will be enabled on BSC. In order to incentify the current validators in Beacon Chain, the voting power of each BNB is adjusted to 200% to ensure smooth transition. With the additional voting power, values of BNB token will increase as it presents a stronger hold for governance.

After the implementation of Feynman hardfork, it is required to inform the BSC validators about the migration of voting power from Beacon Chain to BSC, offering benefits of doubling voting power on BSC as incentive. Additionally, BNB delegators will be adviced to withdraw their delegation from the Beacon Chains and reallocate to BSC. For the stakeholders who should take any action, can refer to official source, or the table below.

source: BNB Chain Fusion Roadmap, BNB Chain

source: BNB Chain Fusion Roadmap, BNB Chain