Kankun Upgrade (Dencun) is another major mainnet upgrade after the Shanghai upgrade on Ethereum.
We know that the successful deployment of the Shanghai upgrade to the mainnet in March this year has given rise to a wave of super trends in LSD and LSDfi. $LDO $RPL $SSV $LBR $PENDLE and other investment targets have become Alpha opportunities to outperform the market.
Therefore, it is natural for the market to have expectations that the Kankun upgrade will also bring some Alpha investment opportunities.
However, before discussing the Alpha investment opportunities, let’s briefly understand the Kankun upgrade.
- Understanding Farcaster, the Decentralized Social Network Promoted by Vitalik
- How are Musk’s best and worst sides intertwined?
- Analysis SBF will face trial. How will he be convicted? What are the procedures involved?
What is the Kankun upgrade?
The upcoming Kankun upgrade is divided into two parts: Deneb focuses on the consensus layer (CL), and Cancun targets the execution layer (EL).
According to a statement provided by Ethereum core developer Tim Beiko, the Kankun conference includes five key Ethereum Improvement Proposals (EIPs) aimed at expanding data storage and reducing costs. They are:
– EIP-4844: Building the stage for full implementation of Danksharding to enhance scalability.
– EIP-1153: Reduce on-chain data storage costs and optimize block space.
– EIP-4788: Improve the structure of cross-chain bridges and staking pools.
– EIP-5656: Make minor code modifications to the Ethereum Virtual Machine (EVM).
– EIP-6780: Remove SELFDESTRUCT, which could terminate smart contracts.
The most important feature of this upgrade is EIP-4844, which introduces Proto-Danksharding, a transitional phase for achieving full Danksharding. It is expected to significantly reduce gas fees and increase transaction throughput by leveraging data “blobs.”
Blobs are “binary large objects,” a data type used for storing large amounts of data.
The implementation of EIP-4844 involves adding a new TX type called blob TX, which is dedicated to storing L2 Rollup to the Ethereum mainnet Beacon chain consensus layer. After being stored as a blob for 3 weeks, it is discarded to decentralized storage networks such as IPFS or Web3 data service providers like Alchemy.
The storage space for a single blob is 128KB, and initially, EIP-4844 is set to have 4 blobs per block, which will be expanded to 64 in the future.
What are the functions of the Kankun upgrade?
The Kankun upgrade brings substantial benefits to the Ethereum mainnet, including:
– Enhanced scalability: The introduction of Proto-Danksharding will help process a larger volume of transactions at a faster speed, thereby enhancing Ethereum as a Layer 2 project for both DeFi and security.
– Reduced gas fees: By leveraging data “blobs” and implementing EIP-4844, the Kankun upgrade can significantly reduce gas fees for L2 interactions.
– Strengthened security: With the help of EIP-6780, the security infrastructure of the network will be enhanced to protect user data and assets.
– Efficient data storage: EIP-1153 will optimize the data storage of the Ethereum chain, improving operational efficiency and cost-effectiveness, which is a great benefit for L2 relying on optimized data management.
– Enhanced cross-chain bridge connectivity: Through the upgrade of EIP-4788, interoperability between different chains will be smoother and more secure.
– Technological innovation: The subtle code modifications introduced by EIP-5656 lay the foundation for future technological advancements, which may drive innovation in L2.
Which sectors will benefit from the Cancun Upgrade?
– Ethereum: The Cancun Upgrade will make the Ethereum network more adaptable, secure, and user-friendly, consolidating its position in the Web3 field.
– L2 solutions: The Cancun Upgrade will significantly reduce the gas fees for L2 interactions and speed up the final confirmation of transactions, greatly improving the user experience.
– Account abstraction (AA) wallets: The optimization of the infrastructure layer will also benefit the application layer, and AA wallets are direct beneficiaries of the Cancun Upgrade. The Cancun Upgrade will greatly reduce the gas fees for AA wallet creation and interactions, improve the interaction confirmation speed (a major pain point for AA wallets), and enhance the user experience.
– Cross-chain bridges: Cross-chain bridges will mainly benefit from the upgrade of EIP-4788, and EIP-4844 will also reduce the cost of using cross-chain bridges.
– Decentralized storage networks: After the deployment of EIP-4844, blob data will be permanently stored in decentralized storage networks such as IPFS. These blobs are a goldmine for MEV bots, market makers, data companies, and other institutions, bringing new value to decentralized storage networks.
How to build a Cancun Upgrade investment portfolio?
First of all, I don’t think that just because the Shanghai Upgrade brought about a bull market, the Cancun Upgrade will definitely bring about a new bull market as well.
Whether the Cancun Upgrade will trigger a bull market depends on factors such as the monetary policy cycle of the Federal Reserve, the Bitcoin halving cycle, seasonal cycles, and risk events.
The key skill in building an investment portfolio is to find a balance point between odds and risk-reward ratio that suits oneself.
Building a Cancun Upgrade investment portfolio in September should be based on a decision where the odds of establishing a position are approximately 50% and the risk-reward ratio is greater than 3.
When building a Cancun Upgrade investment portfolio, the available investment targets include:
– The biggest beneficiary of the Cancun Upgrade, $ETH. Heavily weighted allocation.
– $ARB and $OP in L2 projects. They are the market-consensus beneficiaries of the Cancun Upgrade. The degree of Price In is higher compared to other targets.
– Leading players in cross-chain bridges: $RUNE, $AXL, $STG, $CELER, $SYN. They are currently overlooked by the market. If gas fees and confirmation times for cross-chain bridges improve unexpectedly after the Cancun Upgrade, this sector may gain alpha returns.
-AA Wallet $TWT $SFP $C98. The interaction experience of AA Wallet is expected to benefit from the Cancun upgrade, and there may be improvements that exceed market expectations. Unfortunately, the wallet has not been paid much attention by mainstream funds, so it is advisable to allocate a small position.
-Decentralized storage network $FIL $AR. The market has almost completely overlooked the fact that the decentralized storage network will also benefit from the Cancun upgrade, and it is uncertain whether the market will ultimately recognize and accept this fact.
Everyone can choose suitable targets according to their own situation and create an investment portfolio. If you understand code, you can further optimize the position ratio of the investment portfolio using effective combination methods.
**The above content is not intended as investment advice.
Quoted articles:
1.https://datawallet.com/crypto/ethereum-cancun-upgrade-explained
2.https://medium.com/@hyperoracle-zh/%E5%9F%BA%E4%BA%8E-halo2-%E7%9A%84%E4%BB%A5%E5%A4%AA%E5%9D%8A-kzg-%E4%BB%AA%E5%BC%8F%E5%AE%A2%E6%88%B7%E7%AB%AF-fdc7527d0c1b
Like what you're reading? Subscribe to our top stories.
We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!
