Abstract-As a benefit of bypassing the potentially excessivecomplexity and yet inaccurate channel estimation, differentially encoded modulation in conjunction with low-complexity noncoherent detection constitutes a viable candidate for usercooperative systems, where estimating all the links by the relays is unrealistic. In order to stimulate further research on differentially modulated cooperative systems, a number of fundamental challenges encountered in their practical implementations are addressed, including the time-variant-channel-induced performance erosion, flexible cooperative protocol designs, resource allocation as well as its high-spectral-efficiency transceiver design. Our investigations demonstrate the quantitative benefits of cooperative wireless networks both from a pure capacity perspective as well as from a practical system design perspective.