Ethereum (ETH) has successfully implemented a significant software upgrade known as Dencun, aimed at enhancing the cost-effectiveness of utilizing the network ecosystem. This update is tailored to Layer 2 (L2) networks like Arbitrum (ARB), Polygon (MATIC), and Coinbase’s Base, all interconnected with Ethereum.
Dencun brings about notable reductions in transaction costs across these networks, with fees plummeting from dollars to cents or even fractions of a cent.
The Ethereum Dencun upgrade introduces significant cost savings for users.
Hailed as the most significant enhancement to Ethereum’s user experience, the Dencun upgrade is poised to catalyze the development of new applications and services by substantially cutting costs.
As reported by NewsBTC earlier this week, the update brings forth a novel data storage system, departing from the conventional method of storing Layer 2 data directly on Ethereum. By adopting a new “blobs” repository, data storage expenses are minimized since information is retained for approximately 18 days rather than indefinitely.
A notable advantage of the Dencun upgrade is its impact on decentralized exchanges (DEXs) and gas costs. Projections indicate a significant reduction in gas costs for prominent Layer 2 networks like Arbitrum, Optimism, and Coinbase’s Base.
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The anticipated cost reductions translate into a significant decrease in swaps on various platforms: from $2.02 to $0.40 for Arbitrum, $1.42 to $0.28 for Optimism, and $0.58 to $0.01 for Coinbase’s Base, underscoring the pivotal role of this upgrade.
Following the successful deployment of the upgrade on the mainnet, Tim Beiko, Ethereum Foundation core developer, expressed satisfaction with the achieved progress, stating:
Dencun represents both the most intricate fork we’ve deployed since the Merge and shares the record for “most total EIPs in a fork” with Byzantium. With more teams than ever involved in the process, the execution went remarkably smoothly…! Grateful to collaborate with everyone involved, onward to the next milestone.
Transactions involving blobs and adjustments in pricing.
Arbitrum, a Layer 2 network, sheds light on the upgrade process, indicating that it will take approximately one to two hours for blob transactions to begin posting and for the pricing changes specified by EIP-4844 to take effect.
Additionally, ArbOS Atlas, an upgrade supporting Arbitrum Chains, will introduce further fee reductions for Arbitrum One, scheduled to be activated on March 18th. These updated configurations include a decrease in the Layer 1 (L1) surplus fee from 32 gwei to 0 per compressed byte and a reduction in the L2 base fee from 0.1 gwei to 0.01 gwei.
The Dencun upgrade presents cost-saving opportunities for Layer 2 networks and addresses congestion concerns by freeing up more space on the Ethereum network for additional transactions. Although the upgrade enhances efficiency, it no longer retains a complete record of all data indefinitely.
However, with Layer 2 networks embracing this new update to the Ethereum ecosystem, the stage is set for accelerated adoption, increased usage, and broader accessibility within the Ethereum community and its underlying protocols.
The Dencun upgrade does not succeed in propelling ETH above the $4,000 mark.
Despite the successful upgrade, the price of ETH remains unchanged, persisting in consolidation below the $4,000 threshold. Despite attempts to surpass this critical resistance level on Monday and Tuesday, the token has struggled to maintain a position above it.
For over 24 hours now, ETH has been trading within the range of $3,930 to $3,970. However, it is noteworthy that ETH has sustained its upward momentum, registering gains of over 18% in the past fourteen days and nearly 60% in the past thirty days.
Furthermore, the introduction of the Dencun upgrade is anticipated to stimulate increased demand for ETH, potentially igniting a renewed uptrend that could narrow the gap between current trading prices and its previous all-time high (ATH) of $4,878, reached in November 2021.