Ethereum (ETH) is back in the spotlight due to the upcoming “Dencun” upgrade. This major update is a development that promises improved scalability and a significant reduction in transaction costs. The exact mainnet launch date will be announced on Thursday and will most likely not be long in coming. What exactly does the update contain and what could it mean for ETH?
A new phase in the development of Ethereum
The Dencun upgrade follows the Shapella upgrade that took place on the Ethereum mainnet in April 2023. Shapella introduced the ability to replace Ether. With Dencun, Ethereum goes one step further and focuses on improved scalability and lower costs, which are essential for the network’s growth and adoption.
Ethereum’s cost is perhaps the biggest barrier to widespread adoption right now. Transaction costs or gas fees can sometimes be sky-high, severely hindering the use of the network and forcing people to use Layer 2s like Arbitrum (ARB) and Polygon (MATIC).
A successful test of the update was conducted on the Sepolia testnet on January 30th. Tomorrow there will be another important dress rehearsal on the Holesky testnet. The expectation is therefore high that a date for the Dencun upgrade on the mainnet will be set after the Holesky testnet upgrade. This could happen as early as Thursday, but the schedule remains flexible.
Future prospects and market impact
experts, including Christine Kim Galaxy Digital estimates that the Dencun upgrade will be live on mainnet by the end of March. According to her, this chance is 80%. However, she also has a more optimistic view; namely that the update will be released on the Ethereum mainnet at the end of February. According to Kim, this chance is 40%.
This upgrade promises not only a reduction in transaction fees, but also a significant increase in Ethereum’s transaction processing capacity, potentially to more than 100,000 transactions per second. Such improvements could revolutionize the Ethereum blockchain, making the network more efficient and accessible to a wide range of users and applications.
The successful implementation of Dencun could therefore have a significant impact on the price of ETH. This not only increases Ethereum’s attractiveness for developers and users, but can also increase investor confidence in the long-term viability of the network. This, in turn, could increase demand for ETH and potentially lead to an appreciation of the coin.