1. What is the Cancun Upgrade?
Cancun is a seaside tourist resort city in Mexico and a world-famous resort. Every time Ethereum is upgraded, it is named after the venue of the Ethereum Creator Development Conference. The last time was in Shanghai, and this time it is Cancun. The Cancun-Deneb upgrade, also known as the Cancun upgrade, is another upgrade of the Ethereum main chain after the Ethereum Shanghai upgrade. The purpose is to expand the Ethereum main chain, enhance the scalability, security and availability of the Ethereum network, increase the TPS of the main chain and reduce the gas fee. This upgrade will also drive the outbreak of the L2 ecosystem. The Cancun upgrade is currently mainly centered around EIP-4844 (Deneb) and the KZG ceremony. EOF may appear in this upgrade. The Cancun upgrade is expected to be carried out in the second half of 23 years.
2. What is the principle of Cancun upgrade?
The focus of the Cancun upgrade is the EIP-4844 protocol.
Currently, the expansion of Ethereum is mainly divided into two directions. One is the Layer 2 Rollup that everyone is very familiar with. The current mainstream solutions include Optimism Rollup and ZKRollup. Optimism Rollup is a short-term solution, and ZKRollup is a long-term solution. Another direction is Ethereum's mainnet sharding solution.
After the Ethereum merger, the Consensus Layer (the consensus layer is responsible for POS consensus) and the Execution Layer (the execution layer executes the contract code) were separated. The work of the execution layer is to execute the data stored in Calldata, and the data returned from Layer 2 to Layer 1 is stored in Calldata, but this data only needs to be verified and does not need to be executed, so there is no need to transfer the data of Layer 2 to the execution layer to increase the burden of the execution layer, and it only needs to be stored in the nodes of the consensus layer.
Therefore, someone proposed a solution called Danksharding, which can design a data type Blob for the data sent back by Layer2, and separate it from the Calldata of Layer1. In this way, the Blob data type only needs to be accessed and verified by those in need within a certain period of time, and there is no need for the Layer1 execution layer to execute all of it, which will greatly reduce the burden on Layer1. Blob transaction data is stored in the consensus layer for a maximum of 30 days, and data before 30 days will be cleared. In this case, it may be necessary to retain this data in the decentralized storage network for user access. The EIP-4844 protocol is the first version of Danksharding. The EIP-4844 protocol will reduce Layer2 transaction fees by 10-100 times!
3. Which sectors will benefit from the Cancun upgrade?
Layer2: ZK track is a long-term positive. It has been circulated on the Internet that Vitalik revealed that ZKS may be the ultimate solution for Ethereum. Arb is currently the leader of L2 and is also very worthy of attention. In addition to small and medium-sized Rollups such as OP and Metis, you can refer to the following Rollup chart
L2 storage network: Eth Storage, a layer 2 solution that focuses on solving Ethereum’s dynamic storage problem and provides programmable storage at a lower storage cost based on Ethereum’s data availability.
L2 ecology: DEX, NFT, etc.
Blockchain game sector: As the cost of interaction becomes lower, high-frequency interaction sectors such as blockchain games will surely see corresponding major development.
Summary: After the Cancun upgrade, lower gas fees and higher TPS are achieved, which makes Ethereum's infrastructure more and more perfect, and the entire Ethereum-related sector can achieve unprecedented development and prosperity. I believe that the main theme of the next bull market will also be led by L2.
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