Dencun Upgrade Slashes Layer 2 Fees on Ethereum

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Dencun Upgrade Slashes Layer 2 Fees on Ethereum

The Ethereum blockchain has undergone its biggest upgrade yet with the activation of Dencun on the mainnet. This much-anticipated update ushers in a new era of lower costs and faster transactions for users interacting with Ethereum’s Layer 2 networks.

Dencun leverages EIP-4844, also known as Proto-Danksharding, to establish a dedicated data channel on Ethereum specifically for Layer 2 data. This innovation significantly reduces transaction costs on rollup networks, which are Layer 2 scaling solutions designed to alleviate congestion and high fees on the main Ethereum blockchain.

The upgrade brings a total of nine Ethereum Improvement Proposals (EIPs) to the table, tying it for the most upgrades introduced in a single hard fork. The Ethereum Foundation anticipates that most rollups and their users will experience benefits within hours to days of Dencun’s activation. This is because the availability of data blobs on Ethereum is expected to slash transaction costs by a factor of 5 to 10 times.

Related: Ethereum’s Open Interest Surges: Why it Matters.

Dencun brings us closer to a future where transaction fees are a minor inconvenience rather than a significant barrier to entry.

Similar to how NoSQL breakthroughs like MongoDB loosened restrictions on structured SQL data, EIP-4844 offers developers vast amounts of ephemeral data for innovation without increasing network demand. This, according to Philippe Schommers, director of infrastructure at Gnosis (a company that implemented Dencun on Monday), ensures that Ethereum’s new data storage method doesn’t compromise decentralization.

Lucas Henning, Chief Technology Officer at Suku, describes the change as “less glamorous” but a crucial piece in Ethereum’s “big ambition.” Henning believes Dencun is a vital piece of the puzzle that will empower Ethereum to establish a larger, fully decentralized network.

The Dencun upgrade marks a significant step forward for Ethereum’s scalability and user experience

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