What You Need To Know Ahead of Ethereum's Dencun Update Wednesday
Ethereum is scheduled to undergo a network update called the Deneb-Cancun, or Dencun, on Wednesday, aimed at improving user experience and lowering transaction fees for some users on the the network's Layer 2 blockchains. Ether (ETH), the native coin of the Ethereum blockchain, was trading just a shade under $4,000 on Tuesday.
The Dencun update, which is scheduled to activate on Wednesday, prioritizes scalability, efficiency, and security through the implementation of various Ethereum Improvement Proposals (EIPs).
According to the Ethereum Foundation, the most notable change is EIP-4844 for proto-danksharding, which seeks to optimize gas fees for Layer 2 network (L2) data and enhance the network's ability to handle greater transaction volumes via those secondary layers.
Exchanges may face delays in processing Ethereum transactions on Wednesday as the update rolls out. Coinbase (COIN) said Monday that it expects disruption due to the update to last for at least an hour on or around 6:45 a.m. Pacific time, although that could change.Kraken, meanwhile, is budgeting for about 15 mins of delay for maintenance around 8 a.m. UTC and recommends users «not to place or cancel orders during this timeframe.»
Layer 2 networks, such as rollups, are secondary blockchains built on top of the base Ethereum network. In a bid to scale transaction volumes, rollups compress transactions by bundling them. The initial verification for those transactions happens off the chain, but the transactions are settled on the main Ethereum blockchain.
However, even with the compression, nodes processing transactions hold on to Layer 2 data forever, expanding their hardware requirements, which are then passed on to users via higher transaction or gas
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