Ethereum (ETH) has concluded a major software update, Dencun, that promises to make the network ecosystem more cost-effective to use. This update specifically targets Layer 2 (L2) networks such as Arbitrum (ARB), Polygon (MATIC), and Coinbase, which are interconnected with Ethereum.
With Dencun, transaction costs on these networks have decreased significantly, with fees dropping from dollars to cents or even fractions of a cent.
Ethereum Dencun Upgrade and Cost Savings
Considered the most significant change to the Ethereum end-user experience, the Dencun upgrade is expected to promote the development of new applications and services while significantly reducing expenses.
How NewsBTC reported Tuesday’s update introduces a new data storage system, moving away from the traditional Layer 2 data storage approach on Ethereum itself. Adopting a new “blob” repository reduces data storage costs as information is stored for just 18 days rather than indefinitely.
One of the notable benefits of the Dencun upgrade lies in its impact on decentralized exchanges (DEXs) and gas costs. For example, projected gas costs for popular Layer 2 networks such as Arbitrum, Optimism, and Coinbase’s Base are expected to be significantly reduced.
The projected savings translate into a reduction in Arbitrum swaps from $2.02 to $0.40, Optimism swaps from $1.42 to $0.28, and Coinbase swaps from $0.28. 0.58 to $0.01, emphasizing the central role of this update.
As the update was successfully launched on the mainnet, Tim Beiko, core developer at the Ethereum Foundation, express his satisfaction with the work carried out and stated:
Dencun is the most complex fork we have released since the merge and tied for the “highest total EIPs in a fork” with Byzantium. There were more teams than ever involved in the process and somehow everything worked perfectly…! Thankful to work with them all, next time.
Blob transactions and price changes
Layer 2 Network Arbitrum provided insights into the upgrade process. This it will take about one to two hours for blob transactions to begin post and for the new price changes specified by EIP-4844 to take effect.
ArbOS Atlas, an update that supports Arbitrum Chains, will introduce new fee reductions for Arbitrum One, set to go live on March 18. The updated settings include a reduction in Layer 1 (L1) rate overrun from 32 gwei to 0 per byte compressed and a reduction in L2 base rate from 0.1 gwei to 0.01 gwei.
The Dencun upgrade opens up cost-saving opportunities for Layer 2 networks and addresses congestion issues, freeing up more space on the Ethereum network for additional use. transactions. While upgrading offers greater efficiency, it comes at the cost of no longer maintaining a complete record of all data indefinitely.
However, as Layer 2 networks adopt this new upgrade to the Ethereum ecosystem, the stage is set for broader adoption, use, and accessibility within the Ethereum community and its underlying protocols.
Dencun Upgrade Fails to Boost ETH Above $4,000
Despite the successful update, ETH Price remains unchanged, continuing to consolidate below the $4,000 threshold. The token attempted to overcome this crucial resistance level on Monday and Tuesday but was unable to sustain its position above it.
For over 24 hours, ETH has been trading between $3,930 and $3,970. However, it is important to note that ETH has maintained its upward momentum, with gains of over 18% in the last fourteen days and almost 60% in the last thirty days.
Furthermore, the introduction of the Dencun update is expected to drive an increase demand for ETH, potentially triggering a renewed uptrend that could bridge the gap between current trading prices and its previous all-time high (ATH) of $4,878 reached in November 2021.
Featured image from Shutterstock, chart from TradingView.com
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