‘Dencun’ Upgrade Officially Implemented On Ethereum Mainnet, ETH Price Holds Firm Below $4,000
Ethereum (ETH) has successfully implemented a major software upgrade known as Dencun, aimed at making the utilization of the network ecosystem more cost-effective. This upgrade specifically targets Layer 2 (L2) networks like Arbitrum (ARB), Polygon (MATIC), and Coinbase’s Base, which are interconnected with Ethereum.
The implementation of Dencun has led to a significant decrease in transaction costs on these networks, with fees dropping from dollars to cents or even fractions of a cent.
Considered a substantial change in Ethereum’s user experience, the Dencun upgrade is expected to encourage the development of new applications and services by reducing expenses. The upgrade introduces a new data storage system that departs from the traditional method of storing Layer 2 data on Ethereum itself. By adopting a new “blobs” repository, data storage costs are reduced as information is stored for only about 18 days instead of indefinitely.
One notable advantage of the Dencun upgrade is its impact on decentralized exchanges (DEXs) and gas costs. Gas costs for popular Layer 2 networks like Arbitrum, Optimism, and Coinbase’s Base are projected to be significantly reduced. For instance, projected gas costs for swaps on these networks are set to decrease from $2.02 to $0.40, $1.42 to $0.28, and $0.58 to $0.01 on Arbitrum, Optimism, and Coinbase’s Base, respectively.
After the successful launch of the upgrade on the Ethereum mainnet, Tim Beiko, an Ethereum Foundation core developer, expressed satisfaction with the work accomplished, mentioning that it was the most complex fork since the Merge.
The adoption of blob transactions and the pricing changes specified by EIP-4844, as highlighted by Layer 2 network Arbitrum, will take some time to take effect. It is expected that it will take around one to two hours for blob transactions to start posting and for the new pricing changes to be implemented.
The Dencun upgrade unlocks cost-saving opportunities for Layer 2 networks and addresses congestion concerns by freeing up more space on the Ethereum network for additional transactions. However, this efficiency upgrade comes at the cost of no longer retaining a complete record of all data indefinitely.
Despite the successful upgrade, the price of ETH has not been significantly affected and continues to consolidate below the $4,000 threshold. While it attempted to surpass this resistance level, ETH has maintained its upward momentum with gains exceeding 18% over the past fourteen days and nearly 60% over the past thirty days.
Moreover, the implementation of the Dencun upgrade is expected to drive increased demand for ETH, potentially sparking a renewed uptrend that could bridge the gap between current trading prices and its previous all-time high (ATH) of $4,878, achieved in November 2021.