Ethereum, the perennial runner-up in the cryptocurrency market behind Bitcoin, is currently poised to reach a new all-time high as it experiences a staggering 66% growth within a month. Just recently, ETH surpassed the $3,800 mark and is now aiming for the $4,000 milestone. However, despite this remarkable surge, the token still stands 21% away from its own peak value, which was recorded at $4,890 in November 2021.
Currently, Ethereum is benefiting significantly from several factors. Firstly, it is riding on the momentum generated by Bitcoin itself, which, as reported on Tuesday, reached a new all-time high of over $69,000 amid massive inflows into new Bitcoin spot ETFs. Additionally, Ethereum is poised for a technical upgrade after a period of relative calm. This upgrade, named “Dencun,” is expected to be a turning point in the scalability and efficiency of the Proof-of-Stake blockchain.
According to the Ethereum Foundation, responsible for the blockchain’s development, the Dencun upgrade is scheduled to take place on March 13, 2024, precisely at 13:55 UTC. Currently, everything is proceeding as planned. The upgrade has already been successfully implemented in the testnets, and now it is set to roll out on the mainnet. The primary focus of Dencun is the introduction of ephemeral data shards with EIP-4844, also known as “Protodanksharding,” which is expected to contribute to the reduction of Layer-2 transaction fees.
“The Dencun upgrade, named after the consensus (Deneb) and execution (Cancun) layers, aims to improve data availability and lay the foundation for sharding. Sharding is considered a key technology to increase Ethereum‘s scalability,” stated crypto expert Ed Prinz. With Dencun, the first step towards sharding is now being taken.
Sharding will entail validators no longer needing to compute the entire database but only parts of it. “With sharding, validators no longer need to store all this data themselves but can instead use data techniques to confirm that the data has been provided by the network as a whole. This will drastically reduce the costs of storing data on Layer 1, as less hardware will be required,” according to the Ethereum Foundation. This could enable Ethereum to run on a smartphone, with the potential for 100,000 transactions or more per second (tps) to become a reality, compared to the current rate of 15 tps.
While Ethereum‘s development in terms of price performance is remarkable, what it notably lacks compared to Bitcoin is ETFs traded on Wall Street. While there are already 10 SEC-approved Bitcoin spot ETFs from Blackrock, Fidelity, and others, the SEC has thus far rejected applications for comparable Ethereum ETFs.
