Before understanding the impact of the Cancun upgrade on the market, let's first briefly understand what the Ethereum Cancun upgrade is.

Cancun is a famous tourist city in Mexico and also the venue for the Devcon 3 conference. Following the naming convention of Ethereum upgrades, upgrades named after a place are targeted at the Ethereum execution layer.

The "Cancun upgrade" is synchronized with the Ethereum consensus layer upgrade, codenamed Deneb. Therefore, the complete official name for this Ethereum upgrade, targeting both the execution layer and the protocol layer, has been determined as the "Dencun upgrade," where "Dencun" is a combination of "Cancun" and "Deneb."

After the Ethereum merge, the consensus layer (responsible for PoS consensus) and the execution layer (executing contract code) are separated.

The execution layer's job is to execute the data stored in Calldata. Currently, the data transmitted from Layer2 to L1 is stored in Calldata, but this data only needs to be verified, not executed. It does not need to be transferred to the execution layer to increase the burden on the execution layer; it can be stored only in the consensus layer nodes.

To address this, EIP-4844 introduces a new transaction type called Blob Transaction, which is similar to an additional external database designed specifically for the data transmitted from L2. It separates the data type Blob from L1's Calldata. As a result, Blob data only needs to be accessible and verified by those who need it within a certain time frame, without the need for full execution by the L1 execution layer, thereby significantly reducing the burden on L1.

EIP-4844 is a precursor to Danksharding, aiming to implement off-chain data temporary storage and retrieval through Ethereum nodes, with the potential to reduce L2 transaction fees by 10-100 times.

Conceptualization of the Cancun Upgrade

The Cancun upgrade will bring substantial benefits to the Ethereum network, including enhancing scalability, reducing gas fees, strengthening security, efficient data storage, and enhancing cross-chain connections. After the upgrade, it is expected to stimulate a major outbreak in the Ethereum L1 itself and the L2 ecosystem applications, as well as cross-chain bridges, storage, GameFi, and other sectors.

ETH: The Cancun upgrade will significantly enhance the utility of Ethereum, consolidating its position as the "king of public chains." After the upgrade, it will achieve lower gas fees and higher TPS, making Ethereum's infrastructure increasingly complete, leading to unprecedented development and prosperity in the entire Ethereum ecosystem, naturally increasing the value of ETH.

Layer2: ARB, OP, MATIC, NEAR, GMX, MAGIC, SNX, LRC, IMX, etc.

Of particular focus are the two leading tokens, ARB and OP, both of which have already reached historic highs. The next bull market is crucial for allocating resources to these two tokens, which have the potential for 10x or even 100x growth. One of these two tokens can be selected for primary allocation.

Finally, there are only five days left until the approval of the Bitcoin spot ETF. Below is an analysis and deduction based on the 4-hour Ethereum structure:

From the 4-hour chart, it can be seen that the medium-term trend is oscillating around the 4-hour level pivot. The current operation is the fifth segment of the pivot, and whether this upward segment can break through the new high is crucial. More importantly, whether a three-buy signal will appear at the 4-hour level in the future. A three-buy signal indicates strong bullishness, and the upward space will continue to open. The upward departure segment at the daily level pivot will continue to rise.

In any case, the Cancun upgrade is of great significance to Ethereum and its ecosystem, and it is highly likely to become the next hot spot in the market. When major buying opportunities appear in the Ethereum series, boldly intervene and hold for the long term.

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