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Ethereum’s Dencun Upgrade Drastically Lowers Layer 2 Fees

Following the upgrade, transaction fees on Layer 2 networks like Optimism have dropped by over 90%, showcasing Dencun’s significant impact on reducing costs and enhancing the efficiency of L2 networks.

Ethereum’s Dencun Upgrade Drastically Lowers Layer 2

The Ethereum network’s Dencun upgrade recently went live, introducing significant changes, particularly a noticeable reduction in transaction fees across the board for Layer 2 rollups. This milestone, the most impactful since The Merge in September 2022 which transitioned Ethereum to Proof of Stake, heralds a new era for the network.

Central to the Dencun upgrade is the implementation of 'proto-danksharding', alongside a novel category of transaction that facilitates data storage on Ethereum through data 'blobs'. The innovation allows L2 networks to function more smoothly by storing large amounts of data as blobs, enhancing efficiency, decentralization, and security.

The deployment of blob-carrying transactions has significantly lowered fees on all L2 networks, with platforms like Optimism, Base, and Zora witnessing their transaction fees decrease by over 90%. Arbitrum has also since implemented blob technology and seen similar fee reductions.

Here is a snapshot of the current transaction fees across various networks: Zora at $0.001, Base at $0.026, Optimism at $0.023.


Some have noted that trading on Uniswap via Optimism, for instance, now costs under $0.01—a significant drop, compared to what it was before Dencun (around 1$). 

The upgrade has also spurred users to test its capabilities in slightly more frivolous ways. Ethereum developer Dan Cline uploaded the entire script of BEE MOVIE to the blockchain for just $14. While not a new application per se, Cline’s action highlights the practical testing of the upgrade’s potential to significantly lower Ethereum storage fees for L2 networks. 

However, the broader implications of using blobs for transactions are still taking shape. As the ecosystem continues to grow with more Layer 2 rollups coming online, the competition in the space could potentially lead to an increase in fees again. Additionally, there is concern that the ease of uploading large datasets could lead to misuse of blobs, such as spamming, which might also inadvertently push fees higher. 

Uploading BEE MOVIE to the network is a good example of this type of spam.

While the upgrade proceeded smoothly across most Layer 2 networks, Blast appears to have been the exception, encountering issues that initially halted its block production. However, these problems were swiftly addressed and resolved.

Interestingly, Ethereum’s market value experienced a minor dip after the upgrade went live, which some speculate was due to investors selling the news. Currently, Ethereum is trading just below $4,000, maintaining its status as the second-largest cryptocurrency by market capitalization.