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Cancun Upgrade: Another milestone after Shanghai.

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After the Ethereum Cancun upgrade, what positive news will it bring to the market?

Source: Ebunker Chinese

Cancun Upgrade Introduction

Cancun-Deneb (Dencun, hereinafter referred to as the Cancun upgrade) is the next important upgrade under the Ethereum blockchain, which will improve the scalability, security, and usability of the Ethereum network.

Cancun is an additional upgrade to the Ethereum execution layer based on the Shanghai upgrade. The first step was completed in the Shanghai upgrade on April 12th this year, while Deneb represents the upgrade of the Ethereum consensus layer. This upgrade includes the highly anticipated EIP-4844, also known as Proto-DankSharding, which will lay an important foundation for the implementation of comprehensive DankSharding.

DankSharding

The launch of Beacon Chain and the implementation of the merger are the first two parts of the Ethereum framework upgrade, while DankSharding is the third and most important part. This new design structure will completely replace the original idea of introducing 64 shard chains proposed by the core team.

DankSharding does not allow for more transactions on the main chain, but rather focuses on increasing the data availability of rollups. Rollups are second-layer technologies that bundle blockchain transactions together and process them. Any rollup operator can process a batch of transactions and submit the results and proofs to the main chain. Using specific rollup technologies such as optimistic or ZK, other validators or smart contracts in the network can review the results.

Currently, the mainstream Ethereum layer 2 scaling protocols include Optimism, Arbitrum, Metis, zkSync Era, and Scroll. In order to help the Ethereum network transition to full DankSharding in the long term, EIP-4844 will introduce many key execution layer components this year.

Proto-DankSharding

EIP-4844, also known as Proto-DankSharding, is a temporary upgrade to the Ethereum network proposed by Ethereum developers Protolambda and Dankrad Feist. On the EIP-4844 Q&A page, Ethereum co-founder Vitalik Buterin describes Proto-Danksharding as a "stopgap" solution that will significantly reduce the gas fees of rollups before full sharding implementation.

EIP-4844 is a scaling solution based on Rollup and the first step in Ethereum's scaling roadmap. Prior to the upgrade, Rollup data was permanently stored on Ethereum, which was expensive and resulted in users paying 90% of the transaction cost for Rollup due to storage costs.

To this end, EIP-4844 introduces a new type of transaction - Blob Transaction, where data will be temporarily stored in "Blob" for about one month, after which the data will be deleted. If you want to store long-term data, it will be stored by other service providers according to actual needs.

Shard blob transaction

As mentioned earlier, EIP-4844 introduces a new type of transaction called "blob carrying transaction". Blob, short for "binary large objects", represents 125 KB of payload data. To create a blob carrying transaction, the rollup needs to submit its data to the blob and attach it to the block. A blob carrying transaction can contain up to two blobs. In addition, to encourage such transactions, the upgrade will implement a multi-dimensional EIP-1559 fee market. This feature will introduce variable gas fees for blob carrying transactions based on supply and demand.

The main advantage of carrying transactions with Blob in the encryption industry is cost-effectiveness. Currently, rollup stores transaction data permanently on the Ethereum blockchain through CallData. However, Blob data is much cheaper than CallData because it is not permanently stored on the execution layer (Ethereum virtual machine). Instead, beacon nodes store it in the consensus layer, and after a month or a year, Blob will be deleted. This process is similar to clearing cache data on a laptop or device.

Although introduced by EIP-4844, Blob will be fully compatible with the format used in the final sharding. In EIP-4844, each rollup transaction can contain up to 2 blobs, and each block contains 8-16 blobs, which is about 1MB to 2MB. In the complete sharding scenario, blobs can be further expanded to 16MB to 32MB.

After Blob becomes a part of the Ethereum protocol through Proto-DankSharding, more Blobs will be added to Ethereum blocks, which will significantly expand Ethereum's throughput and reduce transaction costs.

During the transaction process, a polynomial scheme named KZG (named after its creators Kate, Zaverucha, and Goldberg) will verify the transaction data published in the blob. Like other zero-knowledge verification systems, KZG can verify without disclosing all the contents in the blob.

Core of Cancun upgrade: EIP-4844

According to the Ethereum execution layer core developer meeting in June, the Cancun upgrade includes 5 EIPs aimed at increasing data storage and reducing costs. The core content of the upgrade is EIP-4844, which aims to implement off-chain data temporary storage and retrieval through Ethereum nodes to meet the data and storage needs of blockchain applications.

Devnet test network continues to improve

Since October 2022, Ethereum developers have launched a multi-client test network, also known as devnet, for EIP-4844. Since the successful activation of the "Shanghai Upgrade" on April 12th of this year, Ethereum developers have immediately shifted their focus to preparing for the "Cancun Upgrade".

To be precise, Cancun is the name of the next upgrade for the Ethereum Execution Layer (EL), while Deneb is the upgrade name for the corresponding Ethereum Consensus Layer (CL). During the ACDE conference call, developers discussed the final scope of the Cancun/Deneb upgrade, which will be centered around the implementation of the blob transaction type, EIP-4844, with Deneb's preparation work starting from the release of Devnet 5.

Significant changes have been made to Devnet 5, such as prohibiting zero blob transactions in the execution layer (EL), switching the blob transaction type to 0x03, and decoupling blobs and blocks. In terms of engine API updates, there are plans to add corresponding proofs to getBlobsBundleV1, which has not yet been merged, and to merge the "getPayloadV3" and "getBlobsBundleV1" calls into one. As for the beacon chain API, the blob signature endpoint is now optional.

In late May of this year, terence.eth, a developer in the Ethereum community, shared the content of the 22nd EIP-4844 implementer call, which mainly covered three topics: 1. Deneb Engine API version control; 2. Adding "data_gas_used" to the execution header; 3. Devnet 6 scope and test updates.

The meeting has determined that "data_gas_used" will be added to the execution header in the EIP-4844 update, because in the previous EIP1559, the regular base fee was calculated using the current header. In EIP-4844, the calculation of data gas uses the parent header instead of the current header, excess_data_gas is the pricing of the next block, and base_fee is the pricing of the current block. In addition, the meeting decided to use another testnet belonging to EIP4844 to test "data_gas_used" before it is transferred to Devnet 6 to ensure that Devnet 6 covers the update.

At the end of June, the Ethereum Foundation DevOps team's developers announced that all EL and CL client teams have passed the relevant Hive tests of Devnet 7, and plan to launch Devnet 7 as early as June 30 or July 3. Devnet 7 is a dedicated short-term test network for EIP-4844 and will not test other code changes.

The launch goal of Devnet 7 is to increase the blob limit from 2 to 3 and the maximum blob limit from 4 to 6. The goal of increasing blob capacity was proposed by Dankrad Feist, a researcher at the Ethereum Foundation, after conducting data experiments to test the network's ability to handle large blocks.

Currently, regarding the upgrade progress of Cancun, the developers have agreed to update the precompiled address of EIP-4844, the test case for copying memory regions with EVM instructions (EIP-5656) has been added to the testing framework, and the engine API responsible for communication between the consensus layer and the execution layer will face some changes. Devnet 6 has been stabilized after filling in the gaps and Devnet 7, which focuses on testing related to EIP-4844, will be launched with the same code.

Kankun upgrade expected online time

On May 26th of this year, Alex Stokes, a researcher at the Ethereum Foundation, stated that the reasonable target date for the activation of Cancun is October 2023. Lightclient, a developer of Geth (EL), confirmed this statement and believes that the upgrade based on its current scope will take at least another 5-6 months.

On June 9th, Tim Beiko, a core developer of Ethereum, summarized the latest Ethereum Execution Layer Core Developer Meeting (ACDE) on his social media platform. The meeting ultimately confirmed that the Cancun upgrade includes 5 EIPs, aimed at increasing more data storage and reducing costs.

The core content is EIP-4844, which aims to achieve temporary storage and retrieval of off-chain data through Ethereum nodes to meet the data and storage needs of blockchain applications. Other selected EIPs include EIP-1153 (reducing the cost of on-chain storage data to improve block space), EIP-4788 (improving the design of cross-chain bridges and equity pools), EIP-5656 (adding minor code changes related to the Ethereum virtual machine), and EIP-6780 (removing code that may terminate smart contracts). The conference did not make an accurate prediction of the Cancun upgrade time, but it is expected to take place before the end of 2023.

Kankan's upgrade goals and impact

The overall goal of the Cancun upgrade is to continue preparing for the complete data sharding network while expanding rollup during the transition period. Introducing blobs to carry transactions will increase the data availability of rollup and greatly reduce its cost. EIP 4844 will also include the basic work of most execution layer logic and complete sharding. This step will greatly reduce the implementation work required for subsequent upgrades.

After the KanKun upgrade is activated, users will experience faster and cheaper payments when using native cryptocurrencies, applications, and ERC-based tokens in the Ethereum ecosystem. The KanKun upgrade is an important upgrade for Ethereum, opening a new chapter for Ethereum L1 sharding, reducing transmission costs between L1 and L2, achieving lower gas fees and higher TPS, and benefiting related ecosystems such as L2, further strengthening the competitiveness of the "Ethereum + L2" architecture.