Ethereum Watch

• The upgrade went live on the Testnet after a four-hour delay.
• The development would benefit the blockchain in the long term, experts say.

As planned, Ethereum [ETH] developers deployed the Dencun upgrade on the Goerli Testnet on the 17th of January. However, the YouTube livestream of the event showed that it was not without a hitch.

This was because the developers faced challenges finalizing the upgrade despite going live at 6:32 UTC.

The Dencun upgrade is a combination of the Cancun and Denub upgrades, geared towards scalability on the consensus and execution layer, respectively.

Once it hits the Mainnet, the Dencun upgrade would reduce transaction costs on L2s like Arbitrum [ARB] and Optimism [OP]. However, the main goal of the Goerli Testnet was to introduce the EIP-4844.

This mechanism is also called Pronto-Danksharding.

Bug, identified, fixed as Goerli bows out

The goal of this EIP-4844 is to make it cheaper to store off-chain data on the Ethereum blockchain. It is also the first step to full Danksharding, which would increase transaction throughput and reduce gas fees.

Per the hurdle encountered, Ethereum developer Terence Tao posted that the team had to deal with a bug.

Prysm encountered a bug right at Goerli’s hard fork. The bug has been identified, and a fix is currently being merged. A hot patch image will be released within the next few hours. Sorry for the inconvenience, and thank you for your patience!https://t.co/PR9V0lqoCN

— terence.eth (@terencechain) January 17, 2024

However, the developers were quick to find out the problem with the finalization. According to them, there was a concern with the older network validators. This caused the synchronization failure with other nodes and went on for almost four hours.

Moments later, another Ethereum developer, Parithosh Jayanthi, announced that the validators came back online and Goerli finalized.  He wrote on X (formerly Twitter),

“All L2s using Goerli can start testing EIP-4844 now, Looking forward to seeing the process unfold.”

Dencun is the last time that the Goerli Testnet will be involved in any upgrade on the network. This is in tune with AMBCrypto’s previous report that Ethereum is phasing it out.

Following the success of the upgrade, AMBCrypto checked if there had been any impact on development activity. Between the 15th of January to press time, Ethereum’s development activity had fallen from 3.56 to 2.94.

L2s hop on

The decrease implied that public GitHub repositories had dropped. However, the developers’ activity contributors count jumped on the 17th. The increase here was proof that the developers were active in resolving issues related to the upgrade.

In the meantime, AMBCrypto spoke to some experts on what to expect from Ethereum per the upgrade. The first person we had a conversation with was Ender Lu, CTO of Morph, the consumer-centric layer 2 blockchain solution.

According to Lu, the Pronto-Danksharding could lead to an increase in the adoption of L2s. He said,

“By storing transaction data in compressed blob formats rather than individually, platforms like Optimism, Arbitrum, and Morph could see storage fees decrease by up to 80%. Also, with greater cost efficiency, we may see a new wave of Layer 2 adoption from dApps previously priced out of frequent interaction.”    

At press time, we assessed the Total Value Locked (TVL) of Arbitrum and Optimism. Based on L2BEAT’s data, Arbitrum’s TVL was $11.22 billion. This was an 18.25% increase in the last 30 days.

OP Mainnet, on the other hand, had a TVL of $5.90 billion. Like Arbitrum, OP’s TVL increased by double-digits within the same period.

Furthermore, Optimism’s TVL represented a 26.66% market share out of all the L2s. Arbitrum’s market share was 50.65%, indicating that marked participants trusted the optimistic rollups more than any other L2.

Experts think the project’s direction is good

Should Lu’s prediction come to pass, then the TVL might rise higher than stated here. When asked about the possible aftereffect of the Mainnet, Lu told AMBCrypto,

“I foresee Ethereum solidifying its position as a trusted data availability and settlement layer. As transaction fees fall, more dApps will likely deploy natively to Layer 2 rather than Layer 1, helping reduce congestion on Ethereum’s base blockchain.”

Concerning the expected transaction cost reduction, the Bitrue research team told us,

“Historically, such a sharp increase in networks’ accessibility has provoked a surge in their on-chain activity and ecosystem development.”

Bitrue is an exchange for buying and selling hundreds of different cryptocurrencies. However, our chitchat did not stop there. According to Bitrue, the upgrade could strengthen Ethereum’s position as the leader in building projects.

The team added that,

“The Dencun upgrade sets the stage for further improvements in the Ethereum 2.0 roadmap — including sharding that will be implemented in the next few years. This will help the Ethereum ecosystem capitalize on the trends that are already taking place, such as the emergence of interoperable DeFi 2.0, with enhanced functionality, tokenized real-world assets, and more.”

How much are 1,10, 100 ETHs worth today?

After Goerli, the Ethereum Foundation has fixed the 30th of January for the Sepolia Testnet. The Holesky phase would take place on the 7th of February.

However, a look at the roadmap showed that the foundation has not yet scheduled a date for the Dencun Mainnet. However, it noted that it will take place before the end of Q1 2024.

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