Ethereum has released a major upgrade called “Dencun” that aims to make using the network more affordable. This upgrade focuses on Layer 2 (L2) networks like Arbitrum, Polygon, and Coinbase’s Base, which connect to Ethereum.
Cost Savings
Dencun significantly reduces transaction costs on L2 networks. Fees have dropped from dollars to cents or even fractions of a cent. This is expected to boost the development of new apps and services on these networks.
Blob Transactions
Dencun introduces a new data storage system called “blobs.” This reduces data storage costs by keeping information for only 18 days instead of indefinitely.
Impact on DEXs and Gas Costs
The upgrade is particularly beneficial for decentralized exchanges (DEXs) and gas costs. For example, gas costs for swaps on Arbitrum are projected to drop from $2.02 to $0.40, and on Coinbase’s Base from $0.58 to $0.01.
Layer 2 Network Updates
Arbitrum has announced that it will take one to two hours for blob transactions to start posting and for new pricing changes to take effect. Arbitrum One will also receive further fee reductions on March 18th.
Ethereum Price Unaffected
Despite the upgrade, Ethereum’s price remains below $4,000. However, it has gained over 18% in the past two weeks and nearly 60% in the past month. The Dencun upgrade could potentially drive increased demand for ETH and lead to a renewed uptrend.
