The Dencun Upgrade is a significant milestone for the Ethereum mainnet, marking one of its first major upgrades this year. Following last year's Shapella Upgrade, it is a crucial step in Ethereum’s progress, beginning 'The Surge' phase of the Ethereum Roadmap. This phase focuses on enhancing Ethereum’s performance and reducing transaction costs, primarily through the introduction of advanced technologies like sharding. 

Developers have just launched Dencun on the Goerli testnet, with plans to subsequently deploy it on the Sepolia and Holesky testnets. 

The upgrade incorporates nine Ethereum Improvement Proposals (EIPs), aiming to optimize the network. These improvements are expected to significantly reduce gas fees and enhance transaction speeds for L2 rollups.

A pivotal aspect of the upgrade is the introduction of EIP-4844, which features a new type of transaction known as a blob-carrying transaction. This transaction is similar to a standard one, but it includes an additional data segment, termed a “blob”. Blobs enable each block to carry between 1MB and 2MB of data.

Currently, rollup sequencers post data to the Ethereum mainnet using batched transaction data as Ethereum calldata, an arbitrary and often costly data type. With the implementation of EIP-4844, instead of submitting data as calldata, rollup sequencers will be able to use the new blob-carrying transaction type, achieving the same objective more efficiently.

The introduction of blobs is expected to drastically reduce L2 transaction fees (by approximately 90%). Moreover, as blobs effectively increase block space for L2s, the transaction throughput of L2s is also likely to see a significant increase. Additionally, the automatic deletion of blob data after about a month will help minimize unnecessary storage overhead.

In addition to EIP-4844, the upgrade incorporates various other EIPs aimed at enhancing the network through smaller, targeted improvements. EIPs 4788, 6780, and 7514 focus on bolstering security at the application and consensus levels. Meanwhile, EIPs 7044 and 7045 are dedicated to improving the user staking experience and speeding up block confirmation times. Additionally, EIP-5656 and EIP-1153 aim to enhance the cost efficiency of the network. 

The Dencun upgrade is slated for a mainnet launch in early to mid-March, barring any issues during testing. The Goerli testnet encountered minor setbacks due to a bug, causing a delay in finalizing the upgrade. However, the issue was resolved in about 4 hours after the launch. 

The next major milestones will be the launch of Dencun on Sepolia on January 30 and Holesky on February 7.

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