- The Dencun upgrade was among the most significant in the history of Ethereum, reducing fees by up to 90% while introducing Vitalik Buterin’s proto-danksharding data storage formula.
- Layer 2 networks on Ethereum were the biggest gainers, with Arbitrum and Optimism doubling their transaction count as Base surged sixfold.
The Dencun upgrade went live on March 13, ushering Ethereum into a new world of efficiency and low fees. Since then, its impact has been felt, especially with the Layer 2 networks, and it’s serving as a turning point for the mass adoption of the world’s largest altcoin.
Dencun was the combination of two upgrades—Deneb and Cancun. The former focused on amending the consensus mechanism in the network, or how participants agree on the state of transactions, while the latter dealt with how these transactions are processed and managed.
As Crypto News Flash reported at the time, the upgrade was a key step towards Ethereum’s vision of processing a million transactions a second. It also introduced some critical technology that developers have been touting for years.
The most important technology in the Dencun upgrade was proto-danksharding, a technique that removes current limitations with the Ethereum on-chain data storage system. Presently, L2s use a calldata function whose on-chain data needs to be stored permanently by validators. Proto-danksharding replaces calldata with data blobs that can store significantly more data off-chain. This reduces network congestion and boosts performance.
Additionally, it leads to lower fees, with experts noting that the fees could be slashed by up to 90%. One report from Fidelity Digital Assets predicts that the upgrade “unveils the opportunity for near-zero transaction fees for users of layer 2s.”
Dencun Upgrade Takes Ethereum to the Masses
The Dencun upgrade is Ethereum’s best bet for mass adoption, many experts believe. Despite the upgrade being around for less than a month, the network is already reaping the benefits.
Layer 2s have reported significantly more transactions since the upgrade, with Base, Arbitrum, and Optimism among the biggest winners.
Since the upgrade, Arbitrum has shot up from around 800,000 transactions a day to an average of over 1.5 million in the past two weeks. Optimism now averages between 700,000 transactions daily, twice as much as it did prior to the upgrade.
The highest spike has been on Base, the L2 developed by Coinbase, which hit $4 billion in TVL this month, CNF reported. Before the mid-March upgrade, the network averaged less than half a million transactions. However, since Dencun went live, it spiked sixfold and has averaged over three million in daily transactions this week. It’s worth noting though that the spike is also partly attributable to the rise of Degen Chain, a layer 3 network built on Base that launched in late March.
Collectively, Ethereum L2s have thrived and have been on the rise since the Dencun upgrade, hitting highs of 32 million combined transactions weekly, as revealed by Into The Block.
L2 gas costs plummeted following Ethereum’s Dancun upgrade, causing on-chain activity to pick up radically and reaching highs of 32M transactions per Week! pic.twitter.com/aeZt9miclz
— IntoTheBlock (@intotheblock) April 6, 2024
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