Ethereum devs expect 10x lower rollup costs as Dencun upgrade hits testnets

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The Ethereum ecosystem is edging closer to significantly lower gas fees and faster transaction speeds for layer-2 rollups as the Dencun upgrade hits the network’s three testnets in early 2024.

The Dencun network upgrade was activated on the Goerli testnet on Jan. 17 and introduced several Ethereum Improvement Proposals (EIPs). Of particular interest is EIP-4844, which enables proto-danksharding, a highly anticipated improvement touted to reduce L2 transaction fees.

As Cointelegraph reported, the deployment of Dencun to Goerli suffered a four-hour delay caused by a bug that prevented the testnet from finalizing the upgrade. Speaking to Cointelegraph, Nebojsa Urosevic, co-founder of Ethereum development platform Tenderly, unpacked the details of the bug.

“The network could not sync with nodes because of a bug in Prysm, Ethereum’s proof-of-stake client,” Urosevic said.

The Tenderly co-founder, who is also the senior vice president of its engineering team, noted that client synchronization delays are common, which allowed for the bug to be identified and rectified quickly:

“It’s one of the reasons why there are multiple clients and why testnets exist.”

Ethereum Foundation protocol lead Tim Beiko also shared a debrief from the latest All Core Developers Execution Call on Jan. 18, which outlined the historical root issue. Historical roots are a legacy mechanism that Ethereum’s Beacon Chain uses to manage the computational load of the blockchain’s state.

As Beiko sums up, the bug was related to Ethereum’s proof-of-stake client Prysm setting the historical roots value to 0, which prevented the Goerli testnet from finalizing the Dencun upgrade:

Dencun roadmap

As the official Ethereum blog outlines, Dencun incorporates nine different EIPs. Urosevic highlighted proto-danksharding and blob transactions as the most anticipated of the EIPs:

“Proto-danksharding is a major step toward improved Ethereum scalability, thanks to the use of blob-carrying transactions instead of calldata.”

Urosevic explains that data blobs will improve storage efficiency by making transaction data temporarily available in a compressed format. He adds that they are more cost-effective than calldata, with a potential cost reduction of 80%–90%.

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Following the successful implementation on Goerli, the Sepolia and Holesky testnets are next in line to undergo the Dencun upgrade. Urosevic notes that successful deployment on all three testnets is required before plans are made to upgrade Ethereum’s mainnet.

Dencun’s storage improvements

Ethereum sidechain Gnosis’ infrastructure director Philippe Schommers highlights that Dencun will provide more block space and lower costs to L2s, while data that was previously stored indefinitely on-chain will be discarded after two weeks:

“This is scalability in a way that is compatible with our endgame without sacrificing decentralization.”

Urosevic echoes these sentiments, citing storage improvements as one of the major impacts of the Dencun upgrade.

“L2 networks will be able to store data on L1 more efficiently. Blobs will be deleted approximately every two weeks, which is enough for L2s to manage, retrieve and verify the data. This makes blobs cheaper than typical transaction calldata, which is stored indefinitely,” Urosevic explains.

The result sees Dencun deliver lower gas fees and faster transaction fees, which stands to open opportunities for “new, more complex applications on L2 solutions”:

“Dencun will probably lower rollup transaction costs by up to 10 times, depending on blob space demand.”

Rollups stand to be the biggest beneficiaries of the new upgrade, with their economic viability and scalability enhanced by reduced operational costs.

Anurag Arjun, a co-founder of data availability blockchain Avail, adds that the significant growth in demand for block space from rollups in 2023 suggests an expected increase in the demand for block space for data availability from L2s moving forward:

“Proto-danksharding will provide some relief, but it’s clear that rollups need a whole lot more block space for data availability, and we need to be thinking about how we can achieve this in a way that still prioritizes decentralization, scalability and security,” Arjun tells Cointelegraph.

While the systematic upgrades of the Ethereum network work toward lower fees and faster transactions, protocols like Avail could help address the block space demands of rollups in the interim.

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Arjun notes that recent benchmarks of Avail’s zero-knowledge Ethereum Virtual Machine Validium reduce transaction fees by 90% by posting transaction data to Avail instead of Ethereum.

“It still settles to Ethereum and provides data availability guarantees that are decentralized and secure. This is becoming quite an attractive option for blockchains looking to move into the Ethereum ecosystem.”

Urosevic describes the end game of the Dencun upgrade on the Ethereum mainnet, commenting that its implementation will be the first time scalability issues are addressed directly on the mainnet. “Multiple EIPs will bring greater storage efficiency, lower gas fees and an overall better experience for developers while making rollups even more cost-efficient,” Urosevic said.

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