Countdown to Dencun Upgrade: Will Ethereum Price’s Rally?
Ethereum is in the spotlight as its Dencun upgrade inches close. Will Ethereum break above $3,000?
According to Ethereum Foundation Protocol Support Tim Beiko, Ethereum’s next upgrade, Dencun, will be released on January 18. Dencun is set to launch on the Goerli testnet first, with later deployments on the Sepolia and Holesky testnets on January 31 and February 7, 2024, respectively. The mainnet launch is slated for February 2024.
Will this new upgrade makes things better for ETH?
Dencun Slated for Q1/2024
Dencun was initially expected to launch in late 2023, but concerns about testnet deployment timelines and consensus issues prompted Ethereum’s core developers to delay its implementation. While the event is now slated for early 2024, the team hasn’t finalized the upgrade dates.
The upgrade will introduce proto-danksharding, or EIP-4844, to boost data storage and improve the efficiency and scalability of rollups using “blobs.” Blobs are essentially chunks of data, much larger than typical Ethereum transactions, that can be attached to blocks. They can hold up to 125 kilobytes of information, compared to the standard transaction size of about 250 bytes.
The process is expected to positively impact Ethereum’s scaling protocols, such as a drop in transaction fees and network security. Layer 2 solutions have gained significant traction over the past few months due to their cost advantages. However, concerns persist surrounding their security and decentralization. With Dencun, Ethereum seeks to address these challenges within rollups and enhance the performance of bridges and staking protocols.
Recent tests signified widespread acceptance of the Dencun upgrade among Ethereum nodes, with a 99% participation rate. Meanwhile, 95% of data blobs propagated in under two seconds, which suggests that the coming upgrade could result in potential improvements in scalability and network efficiency.
Dencun’s impact extends far beyond technical upgrades. It marks a turning point for the Ethereum ecosystem, paving the way for explosive growth and groundbreaking innovation.
Enhanced data storage, streamlined transactions, and boosted scalability unlock new possibilities. These ripples will be felt across the entire community, nurturing an environment where groundbreaking developments can flourish and a more inclusive, robust digital economy takes root.
On December 31, Ethereum’s creator, Vitalik Buterin, issued the blockchain’s 2024 roadmap. The key highlights are the application of single-slot finality to solve the problems of the proof-of-stake mechanism, Dencun implementation, solutions to miner extractable value (MAV), the centralization of liquid staking, and Ethereum’s design simplification.
In a post published on December 27, Vitalik suggested three ways to make Ethereum’s proof-of-stake “considerably simpler and lighter.” He proposed reducing validator signatures to 8192, encompassing decentralized staking, two-tiered staking, and rotating validator participation. His proposal aims to ease the system’s technical load while maintaining efficiency, security, and decentralization.
Spot Ethereum ETF Outlook
Along with the highly anticipated Dencun upgrade, Ethereum enthusiasts eagerly await the US Securities and Exchange Commission’s (SEC) decision on spot Ethereum exchange-traded funds (ETFs). Market observers believe the SEC’s upcoming ruling on spot Bitcoin ETFs, expected by January 10th, could serve as a catalyst for approving spot Ethereum ETFs.
Major institutions like BlackRock, ARK Invest, VanEck, Fidelity, Invesco, and Grayscale have all filed applications for spot Ethereum ETFs in the US. While no approvals have been granted, the SEC extended its decision deadline for these proposals to May 2024. However, with the outcome of spot Bitcoin ETF filings looming, analysts anticipate a similar one for spot Ethereum ETFs likely to follow.
Ethereum is trading at around $2,300 at current prices. There’s growing anticipation in the crypto community about Ethereum’s potential to reach new heights this year in alignment with a series of important events. If an ETF hits the markets in 2024, ETH’s price will likely rise.
Now, we just have to wait and see how the upgrade goes, and what the 2024 crypto market brings.
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