In the ever-evolving world of blockchain and cryptocurrency, staying ahead requires constant innovation. One of the latest advancements making headlines is the Dencun Ethereum update, a significant development in the Ethereum network that promises to enhance its performance, scalability, and security. To understand the technical details and implications of this update, we spoke with Andrey Logunov, a blockchain technology expert.
The Dencun Ethereum update happened on 03/13/2024 and promises a new era for the Ethereum network, introducing a new way of storing data and promising to reduce fees for Layer 2 networks. Developers mention that Ethereum's main network fees will not be affected by this update and they remain the same.
Expert Insight: Andrey Logunov
To delve deeper into the technical aspects and implications of this update, we asked Andrey Logunov, a leading authority on blockchain technology.
Q: Andrey, what is a Dencun update and why is there a lot of hype around it?
Andrey: Dencun (actually Deneb/Cancun) is a hard fork of Ethereum that happened back in March 2024, and it contains a lot of changes, but the main highlight of this update is, of course, Proto-Danksharding (EIP-4844). Besides that, it introduces two new EVM instructions that are already included in Solidity 0.8.25. The main point of the update is to optimize fees for Layer 2 networks, and we have already seen that L2 fees have dropped significantly.
It's no secret that high Ethereum fees have caused a lot of pain for regular users, and scalability is a technical challenge. This update mainly improves scalability for the Ethereum network, but it did so not for end-users but mostly for Layer 2 networks, and this is a new approach for Ethereum to scale.
Q: Please elaborate more on scalability - what are the problems there and why are there not easier ways to improve scalability?
Andrey: The blockchain trilemma - the trade-off between security, scalability, and decentralization - is a fundamental challenge in blockchain technology. You can optimize for two of these three aspects, but the third one will inevitably suffer. This is a core issue that many projects claim to have solved, but no one has truly cracked it yet.
In a blockchain network, nodes synchronize data among themselves. More nodes mean greater decentralization, but also more challenges in keeping the state in sync, leading to performance bottlenecks and potential security vulnerabilities. Optimizing purely for performance would mean having a limited number of powerful nodes (super servers), but this would compromise security, as these nodes could potentially manipulate the blockchain state.
There are no easy ways to improve scalability because it requires carefully balancing the three aspects of the trilemma. Solutions like sharding, Layer 2 scaling, and other innovations help, but they all involve trade-offs. Ethereum's approach with the Dencun update is to leverage Proto-Danksharding as a data availability sampling scheme to improve scalability for Layer 2 networks, without compromising too much on security or decentralization for the main chain.
Q: So nodes are limited, but how can Danksharding help us there?
Andrey: Yes, nodes have limited performance. Full nodes require at least 4 CPU cores and 16GB of RAM - specifications that most modern computers or servers can handle. However, the storage requirements are a major bottleneck in scaling. One of the popular Ethereum clients, Geth, uses around 12TB of disk storage. While 12TB of SSD storage is possible, it's not a common or affordable option. And this storage space grows continuously, as blockchains store data forever. This is where the core problem lies in scaling.
The idea behind EIP-4844 is to question why the blockchain should validate and store Layer 2 data. Danksharding introduces the concept of "blob data" - a new type of data storage that is temporary. It includes new APIs and transaction types to interact with this blob data. Nodes only need to store this BLOB data for 4096 epochs, which is around 18 days, after which they can delete it.
By separating Layer 2 data into these temporary blobs, Danksharding reduces the ever-growing storage burden on nodes, allowing them to operate with more reasonable disk space requirements. This helps improve the scalability of the Ethereum network without compromising security or decentralization for the main chain.
Q: But how does that affect Layer 2 chains and why only Layer 2?
Andrey: Layer 2 chains typically have their own data storage and rely on Layer 1 like Ethereum for security (the decentralized network of nodes). They only need to store some recent data on the Layer 1 chain. Before Danksharding, Layer 2 chains had to store all their data in smart contracts and compete with regular users for transaction fees on the main Ethereum chain. After Danksharding, Layer 2 chains have access to cheap, temporary blob storage with much lower fees.
The focus on Layer 2 scaling is because Layer 1 (Ethereum mainnet) still needs to store all state data permanently for full security and decentralization. Danksharding provides a compromise by allowing temporary data like Layer 2 blobs to be stored cheaply without burdening Layer 1 nodes indefinitely.
This does provide some benefit to regular users on Layer 1 as well, since Layer 2 activity no longer competes for the same limited block space. However, the main impact is making Layer 2 rollup economies viable by drastically reducing their data costs on Ethereum. This enables better scalability for applications built on Layer 2 rollups.
Q: Why 18 days? What's the magic about this number?
Andrey: The choice of 18 days (or 4096 epochs) for the temporary blob data storage period is not entirely magic, but rather a practical compromise based on the requirements of different Layer 2 solutions.
There are multiple Layer 2 solutions, with the most popular ones being ZK-Rollups and Optimistic Rollups. ZK-Rollups have instant confirmation time for transferring data between Layer 1 and Layer 2. On the other hand, Optimistic Rollups are "optimistic" by nature and have a settlement time of around 1-2 weeks. This means that within a period of 2 weeks (14 days), some transactions can potentially be reverted, and data from the last 2 weeks needs to be available.
Additionally, in the blockchain world, time is not measured in strict dates but rather in epochs. In the IT industry, we often deal with numbers like 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, etc. It's possible to use any number of epochs, but it's generally best to align with these familiar numbers, and 4096 is a suitable candidate in this case.
By setting the temporary storage period to 4096 epochs (approximately 18 days), Danksharding ensures that both ZK-Rollups and Optimistic Rollups have sufficient time to handle any potential transaction reversals or disputes. At the same time, it aligns with the familiar pattern of power-of-two numbers commonly used in computing systems.
Q: Do you believe that this update can keep Ethereum as a leading solution on the market?
Andrey: Definitely. For now, Ethereum is the main technology leader driving most innovations. Other EVM-compatible chains mostly copy these innovations from Ethereum. I like the vision of Ethereum acting as the main chain, with specialized Layer 2 chains working together in a synergistic manner, rather than competing.
Conclusion
The latest Deneb Ethereum update represents a monumental step forward in the evolution of blockchain technology. With significant improvements to Layer 2 scalability, it addresses some long-standing Ethereum challenges, including taking the initial steps towards sharding. As Andrey Logunov highlights, these updates not only enhance the platform's functionality but also position Ethereum as a leader in the rapidly evolving blockchain space.