The highly anticipated Dencun update for Ethereum has finally arrived. Could this signal a shift towards lower user fees on the network?
Prior to the launch of the Dencun update, the average gas fee on Ethereum stood at 66 Gwei, reaching one of the highest levels in the past six months. This meant that transferring one Ethereum (ETH) cost $5.49, while exchanging tokens on a decentralized exchange (DEX) would set you back around $94.56. Additionally, the commission for selling a non-fungible token (NFT) on the Ethereum network was approximately $159.81.
The Dencun update has been long awaited, but the question remains – has the issue of high network fees been addressed? Developers are aiming to tackle this problem through “proto-danksharding,” a key component of the EIP-4844 proposal within Dencun.
Grayscale analysts believe that the full implementation of the Dencun update is crucial for Ethereum to become the most secure blockchain for decentralized applications (dapps). The growing popularity of layer-2 blockchains is expected to intensify competition as they vie for users on their platforms.
According to reports, Ethereum’s network effects and liquidity advantages make it particularly appealing for attracting new financial applications and developers. The growth of layer-2 networks has also brought in new users to the ecosystem, with platforms like zkSync, Arbitrum, Optimism, and Base experiencing steady growth.
In tandem with the rise of the second cryptocurrency, the market capitalization of various projects and altcoins related to layer-2 solutions for the Ethereum blockchain is on the rise.
Experts have weighed in on the issue of gas fees. Ansgar Dietrichs, a researcher at the Ethereum Foundation, explained that with the Dencun update, protocols on the network will now operate more efficiently. However, Max Wadington, an analyst at Fidelity Investments, suggests that the fee reductions promised for layer-2 users may not directly impact those transacting on the Ethereum network.
Philippe Schommers, head of infrastructure at Gnosis, praised the innovation behind the new “blob” transactions introduced by proto-danksharding, highlighting the progress towards creating a more scalable Ethereum network.
The Dencun update has sparked divergent opinions among crypto executives, with some optimistic about the lower fees it promises. After the update went live, the Ethereum network experienced some turbulence, but users reported a drop in fees for layer-2 chains. There was a noticeable improvement in Ethereum’s fees, with the Gwei dropping to 44 and significant decreases in fees for layer-2 networks like Optimism.
While developers proceed cautiously with the Dencun update, its impact on Ethereum has been positive so far, with reduced fees and a growing user base.