The Ethereum Cancun-Deneb, also known as Dencun, is the next significant upgrade to the world’s second-largest blockchain. BeInCrypto sat down with CoinEx VP and Lead of CoinEx Research Bonnie Chan to explore its transformative power, discuss the significance of Layer-2 solutions, and shed light on the future of the Ethereum ecosystem.
All Eyes on Dencun
CoinEx Research was established to align with CoinEx’s overarching slogan — making trading easier. At the core of the team’s vision lies the aspiration to reduce barriers to decentralized finance, ultimately empowering people to engage, learn, and participate in cryptocurrency investment.
With the recent Dencun upgrade, CoinEx’s research team mainly focuses on several key aspects. The Cancun-Deneb, as Bonnie highlights, includes five main EIPs. EIP-4844 is garnering significant market attention since its main purpose is to solve the scalability problem of Ethereum and lower the transaction costs of L2 solutions. This enhancement is poised to attract more capital and users, fostering greater adoption and investment within the whole ecosystem.
Name-wise, the team’s attention is drawn to a few projects. By diving deeper into them, CoinEx aims to gain insights into the potential benefits and innovations introduced by the Dencun upgrade.
«We focus on three directions. Firstly, it’s two leading solutions — Optimism and Arbitrum, and their ecosystems. We also follow up on the progress of the Zk Rollup protocols, such as zkSync, Starknet, Scroll and Linea. Our team recognizes their importance in the future of Ethereum despite higher development complexity. And last but not least, we pay close attention to some L2s that are very popular and have strong technical capabilities, such as Metis, Manta, and Blast».
Arbitrum, as Chan notes, has always been the L2 with the highest number and richest protocols. GameFi and derivatives are the most prosperous sectors in its ecosystem, requiring very high TPS and underlying performance from the blockchain. After the introduction of EIP-4844, project parties and developers can focus on business-level innovation, continue to create better products, and form a virtuous cycle.
The OP Stack created by Optimism has been favored by many well-known project parties since its release as well. These include Coinbase’s Base chain and long-established projects such as Worldcoin, Zora, and DeBank that implement so-called “one-click chain publishing”. The performance improvements brought by EIP-4844 can also benefit Optimism and the SuperChain network.
Layer-2 Risks and Challenges
CoinEx evaluates Layer-2 solutions based on several key criteria, including technical side, team, and community. By focusing on these aspects, the research team ensures that listed projects align with high performance, innovation, and engagement standards.
«The main thing we need to pay attention to is the maturity of the solution. The current Layer-2 development framework is becoming more and more prosperous. So if a project doesn’t use the mainstream framework, we have to determine the feasibility and security of its solution, whether it is just a scam. CoinEx works together through risk control, assets, research and other groups in early warning, real-time detection and other aspects to ensure we minimize the impact when situations occur. Because of the current Layer-2 blowout, identifying a potentially valuable ecosystem among the many emerging solutions is a topic we need to constantly explore».
The same goes for the liquid staking sector. The evaluation of LSD projects involves monitoring Ethereum’s rising liquid staking volume after its conversion to Proof-of-Stake. While Lido holds a prominent position, emerging protocols compete for market share. With the ETH staked amount expected to accelerate after the Dencun upgrade, intensified competition may dilute Lido’s overall share.
«EigenLayer remains dominant in the restaking sector, with its anticipated token issuance and continuous protocol development poised to stimulate the growth. However, emerging liquid staking and restaking derivative protocols, although amplifying returns, introduce heightened risk. Future issues could potentially harm user assets, emphasizing the need for careful consideration and risk mitigation in these evolving sectors. As the Dencun upgrade unfolds, ongoing vigilance and strategic evaluation remain crucial for navigating the liquid staking and restaking market».
Looking ahead, the Research Lead reflects on the impact of the evolution of L2 solutions. CoinEx’s listing strategies, she says, align with transformative developments. Anticipating increased adoption in the Ethereum ecosystem, the exchange will strategically assess and integrate more ETH and USDT deposit and withdrawal options on various L2 networks. This ensures the users can seamlessly navigate and capitalize on the evolving market, enjoying a user-friendly and innovative trading experience.
CoinEx’s Educational Approach
CoinEx employs a multifaceted approach to educate users and the wider crypto community on the Ethereum Dencun upgrade. Through tutorials, articles, reports, and TwitterSpace sessions, the exchange aims to provide accessible learning resources and facilitate user engagement.
«Over the past two months, we released a series of educational articles and reports covering technical principles, impact analysis on users, developers, and enterprises, as well as insights into how various sectors, like LSD, can capitalize on the upgrade. The Layer-2 solutions’ scaling advancements and potential benefits for specific cryptocurrencies have also been explored. During CoinEx’s brand day in February, a 50% discount on ETH trading fees subtly highlighted the upcoming upgrade. Moreover, we plan plans numerous operational activities for tokens benefitting from the Dencun upgrade».
In her closing remarks, Bonnie underlines the current market condition. The trend leans towards a bullish sentiment, especially with the approval of Bitcoin spot ETFs and the halving event. Ethereum’s optimization efforts and promising Solana ecosystem performance will contribute to the rapidly recovering scene. Hence, CoinEx Research Lead suggests investors focus on key players like Bitcoin, Ethereum, and Solana and the related projects for potential growth opportunities amidst the current market environment.
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