On March 13, at 1:55 PM UTC, the Dencun update was successfully deployed on the Ethereum mainnet.
The most anticipated hard fork since the Merge, Dencun is projected to improve Ethereum’s overall scalability and drastically lower layer-2 network transaction fees.
According to Arthur Breitman, co-founder of the Tezos blockchain, while the Dencun improvement is a positive move, it won’t completely address the drawbacks of layer-2 solutions.
“The Dencun improvement extends the data that rollups on Ethereum can use to the bare minimum, which should reduce the cost of transactions in these L2 solutions. Although this is a positive move, rollups based on Ethereum are still severely limited in their throughput and must eventually embrace extreme centralization measures.”
The debut of Dencun occurs almost a year after the Shanghai upgrade in April 2023, which made it possible for users to unstake their Ether ETH following the Merge and the network’s switch to a proof-of-stake model.
There are nine distinct Ethereum Improvement Proposals (EIPs) included in the Dencun hard split. The Cancun upgrade for Ethereum’s execution layer and the Deneb upgrade for its consensus layer are combined to form the upgrade’s name. The second component, Deneb, tries to enhance the consensus layer, or the process by which network users agree on the current state of the blockchain. The first component, Cancun, concentrates on enhancing the management and processing of transactions on the execution layer.
The CEO and creator of Digital Finance Group, James Wo, claims that one of the most noteworthy aspects of the update is the addition of data blobs via EIP-4844, also referred to as proto-danksharding.
[Proto-danksharding] is an essential step in making Ethereum a scalable settlement layer since it seeks to lower layer-2 transaction fees by improving data availability.
However, a March 6 study by Max Wadington, a research analyst at Fidelity Investments, claims that users of the Ethereum mainnet will not be impacted by the anticipated cost reductions. He penned:
Users who want to take advantage of this fee change in the near future will have to give up some security and decentralization by using L2s rather than Ethereum for transactional purposes. This will undoubtedly encourage more users to use other bridge assets. But as L2 platforms continue to develop, we firmly believe that, in the medium term, using Ethereum for application-specific transactions will still be the best choice (particularly for high-value transactions).
Gas fees on the Ethereum mainnet remain high, above 72 gwei. An average swap would cost users $86.15 in gas fees, while nonfungible token sales average $145.60 in gas, according to Etherscan data.
