Ethereum (ETH) is gearing up for its Dencun update, slated for early 2024, which is pivotal in its quest for enhanced scalability as a settlement platform.
Goldman Sachs, in a recent commentary, emphasized the central thrust of the Dencun upgrade: augmenting data accessibility for layer-2 rollups using proto-danksharding.
The financial institution posits that this improvement will lead to decreased transaction expenses for rollups, a benefit that will eventually be enjoyed by consumers.
“The core outcome of Dencun will be the enhanced data support for layer-2 rollups through proto-danksharding. This will cut down transaction fees for rollups, a savings that will directly benefit users.”
At the foundation of blockchain technology lies the layer 1 network, acting as the bedrock or primary infrastructure.
Layer 2, on the other hand, represents off-chain solutions or distinct blockchains constructed atop layer 1 networks.
Rollups, integral components of layer 2, expedite transaction processing on a swifter blockchain, then relay that data back to the main blockchain, all while significantly reducing costs.
The Dencun upgrade’s proto-danksharding feature is poised to not just bolster data accessibility for layer-2 rollups, but also set the stage for subsequent scalability enhancements, danksharding included.
Danksharding is a strategic approach tailored to amplify Ethereum’s scalability. It segments the network into various shards, aiming to boost data storage capabilities rather than merely elevating transaction speed.
Dencun to Improve Ethereum’s Scalability
The Goldman Sachs analysis indicates that Dencun will amplify Ethereum’s scalability by integrating rollups.
Furthermore, the upgrade promises to fine-tune gas prices, bolster network defenses, and introduce a series of maintenance enhancements targeting holistic network advancement.
In a recent revelation, Ethereum’s co-founder, Vitalik Buterin, acknowledged the predominant centralization of nodes as a pressing concern for the network. This is underscored by the reality that a vast majority of the 5,901 active Ethereum full nodes operate on centralized platforms like Amazon Web Services (AWS).
Buterin, the brain behind Ethereum, expressed his aspiration that, in time, fully authenticated Ethereum nodes could feasibly operate on standard mobile phones.
He asserted that addressing the centralization issue of full nodes represents a significant step towards making Ethereum genuinely decentralized.
To preserve Ethereum’s decentralized essence, several notable liquid staking providers are either adopting or gearing up to adopt a self-imposed limitation.
This measure ensures that these entities will not dominate more than 22% of the Ethereum staking landscape, a move aimed at alleviating concerns regarding the escalating centralization in Ethereum staking.
Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance are among the staking platforms that have pledged allegiance to this self-limitation, as recently shared by Ethereum core developer Superphiz on Twitter.