Dencun Hard Fork Boosts Ethereum Scalability; ETH Price Sees Minor Dip
Summary:
The Dencun hard fork, Ethereum's largest upgrade since the Merge, launched on March 13 and while its touted promise was a reduction of transaction fees for Layer-2 (L2) scaling networks, its primary benefit is fee stabilization, according to Fuel Labs CEO and founder, Nick Dodson. Several Ethereum's L2s experienced a 99% transaction fee reduction following the upgrade. Dodson emphasized the main benefit of the upgrade is enhancing network scalability, stabilizing fees for upcoming users, and increased network capacity potentially leading to even cheaper L2 fees in the future. Despite the upgrade, Ether (ETH) price experienced a 2.44% decrease.
On March 13, the main network of Ethereum saw the launch of its Dencun hard fork, hailed as the largest enhancement since the Merge. The primary selling point for many was the predicted reduction of transaction costs for Layer-2 (L2) scaling networks. However, Fuel Labs CEO and founder, Nick Dodson, informed Cointelegraph in an interview that the central advantage of the upgrade is in fact fee equilibrium, rather than reduction. "While many highlight the EIP-4844's fee reduction, the crux lies in fee stabilization. The focus should be on enlarging the capacity and scale, rather than merely lowering fees", he said. Ethereum's L2s, encompassing Starknet, Optimism, Base, and Zora OP, experienced a median transaction cost reduction of an impressive 99% in the aftermath of the upgrade's implementation. While the reduction in Dencun upgrade’s fee for L2s is a substantial boon for the sector, Dodson stipulates that the primary benefit pertains to the network's large-scale potential and stabilizing fees for an influx of millions of new users. He foresees the increased network capacity leading to even cheaper Layer-2 fees in forthcoming upgrades, expounding, “As we increase data blob capacity, there'll be a shift in dynamics, enabling more capacity and likely cheaper data availability.” Nine Ethereum Improvement Proposals (EIPs) were included in the Dencun hard fork, with the first segment, Cancun, concentrating on enhancing the management and processing of transactions on the executing layer, while the second segment, Deneb, is aimed at refining the consensus layer, which is how network participants reach a consensus on the blockchain's status. According to Dodson, the upgrade will significantly augment the Ethereum network's scalability and throughput. "Ethereum is now poised to serve many more users globally... A practical, meaningful upgrade brings us a step closer to truly augmenting throughput, surpassing just rollups. The Layer-1 is finally bolstering its capacity to service diverse sorts of rollups and executions." CoinMarketCap data highlights a 2.44% dip in the price of Ether (ETH) in the 24 hours leading up to 11:30am UTC, settling at $3,956, post-upgrade.
Published At
3/14/2024 2:53:31 PM
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