According to the project development team’s announcement, the upcoming upgrade of Ethereum, named Cancun-Deneb (Dencun), is expected to be deployed around the fourth quarter of this year. This upgrade will introduce the “blobbing transactions” mechanism.
Service providers offering liquidity staking, especially Lido, have witnessed significant growth. Additionally, there is a strong emphasis on users’ interest in liquidity and increased flexibility in their staking activities.
The protocols and assets linked to ETH that have been staked have been delivering outstanding profits compared to other major digital assets in the market over the past week.
In contrast to the liquidity staking tokens, Bitcoin and ETH have experienced modest gains of approximately 0.9% and 4.1% respectively over the past 7 days. These top blue-chip digital assets account for around 51% and 20% of the total market share, respectively.
Joo Kian, an analyst from Delphi, stated
“With the upcoming Cancun upgrade, L2 aggregators can expect significantly higher yield rates as the data costs on L1 are set to decrease substantially. Aggregators, which play a role in receiving and batching transaction orders to offload the Ethereum main blockchain, will operate more efficiently and profitably.”
Dencun brings about five significant changes to Ethereum, including:
- EIP-4844, also known as proto-danksharding, is a scalability solution for the Ethereum blockchain (Layer-1) that helps reduce transaction fees for Layer-2 solutions.
- EIP-1153 reduces the cost of storing data on the blockchain, allowing blocks to store additional transactions.
- EIP-4788 improves the design of cross-chain bridges and staking pools.
- EIP-5656 updates the Ethereum Virtual Machine with minor changes.
- EIP-6780 removes code segments that enable the cancellation of smart contracts.
Dencun is the next major upgrade of Ethereum following the Shanghai hard fork in April 2023. After the Shanghai hard fork, the staking landscape of Ethereum underwent significant changes. Despite the upgrade enabling the withdrawal of staked ETH, users have increased their staking participation instead of withdrawing funds.
According to Glassnode, the volume of staked ETH equals or exceeds the inflow of funds into exchanges following the upgrade.