The Dencun upgrade, which was successfully implemented on the Ethereum mainnet on March 13 at 1:55 pm UTC, is being hailed as one of the most anticipated hard forks since the merger. Its primary goal is to drastically reduce transaction fees on the second-layer network and improve the overall scalability of Ethereum. Co-founder of the Tezos blockchain, Arthur Breitman, noted that while the Dencun upgrade is a step forward, it does not address all the shortcomings of layer 2 solutions. He emphasized that while it enhances data aggregation on Ethereum, the throughput limitations of Rollups remain a challenge, necessitating extreme centralization measures.
The launch of Dencun follows the April 2023 Shanghai upgrade, which marked a significant milestone as it allowed network participants to unstake ether, making it the first time the merged network transitioned to a proof-of-stake network. Comprising nine different Ethereum Improvement Proposals (EIPs), the Dencun hard fork merges the Cancun upgrade, which focuses on transaction management, with the Deneb upgrade, which aims to enhance the consensus layer.
One of the most notable features introduced by the Dencun upgrade is the implementation of data blobs, also known as raw danksharding, through EIP-4844. This enhancement is expected to reduce layer 2 transaction fees by improving data availability, thereby laying a crucial foundation for Ethereum to function as a scalable settlement layer. Despite these advancements, the fee reductions promised by Dencun will not directly impact Ethereum mainnet users, according to Fidelity Investments Research analyst Max Wadington.
In the short term, users seeking lower fees will need to sacrifice some decentralization and security by transacting on layer 2 solutions instead of Ethereum. This may incentivize more users to bridge assets to other platforms. However, Wadington believes that in the medium term, Ethereum will continue to be the preferred option for specific application purposes, especially for high-value transactions. Despite the Dencun upgrade's implementation, gas fees on the Ethereum mainnet remain high, with an average swap costing users $86.15 in gas fees and non-fungible token sales averaging $145.60 in gas fees, according to data from Etherscan.
