New facilities explore warm dense matter (WDM) at conditions with extreme densities (exceeding ten times condensed matter densities) so that electrons are degenerate even at temperatures of 10-100 eV. Whereas in the nondegenerate region correlation effects such as Debye screening are relevant for the ionization potential depression (IPD), new effects have to be considered in degenerate plasmas. In addition to the Fock shift of the self-energies, the bound-state Pauli blocking becomes important with increasing density. Standard approaches to IPD such as Stewart-Pyatt and widely used opacity tables (e.g., OPAL) do not contain Pauli blocking effects for bound states. The consideration of degeneracy effects leads to a reduction of the ionization potential and to a higher degree of ionization. As an example, we present calculations for the ionization degree of carbon plasmas at T = 100 eV and extreme densities up to 40 g/cm^{3}, which are relevant to experiments that are currently scheduled at the National Ignition Facility.