Ethereum's Dencun Upgrade Poised to Transform Layer-2 Scaling, Boosts Ether's Price
Summary:
Ethereum's Dencun upgrade, scheduled to release on March 13, is poised to significantly reduce transaction fees on layer-2 networks. This upgrade comprises nine Ethereum Improvement Proposals (EIPs) and aims to improve the blockchain's scalability and efficiency. However, analysts suggest that the fee reduction is unlikely to directly impact users transacting on Ethereum's mainnet. The anticipation around the upgrade has led to a surge in Ether's price, reaching the $4,000 mark for the first time since December 2021.
Mark your calendar for March 13, as Ethereum's eagerly-awaited Dencun upgrade is slated to take flight. This hard fork event is stirring major excitement for its potential monumental impact on layer-2 scaling solutions. It's predicted that this upgrade will notably cut down transaction fees on layer-2 networks, paving the way for enhancing Ethereum's scalability capacities.
Nine individual Ethereum Improvement Proposals (EIPs) are incorporated within the Dencun hard fork. This upgrade gets its name from the amalgamation of Ethereum’s Cancun - the execution layer update, and Deneb - the consensus layer upgrade. While Cancun centralizes on refining the management and procession of transactions on the execution layer, Deneb intends to improve the consensus layer, which determines how participants concur on the blockchain's state.
Digital Finance Group CEO and founder, James Wo, anticipates the upgrade will substantially boost the scalability, efficacy, and security of the Ethereum network. A pivotal aspect of the Dencun upgrade, as per Wo, is the inclusion of ephemeral data blobs with EIP-4844, or proto-danksharding, intended to diminish layer-2 transaction fees by augmenting data availability - a strategic step toward positioning Ethereum as a scalable settlement layer.
However, not all users will feel this fee reduction directly. Users transacting on Ethereum's mainnet won't be directly impacted by this change, Fidelity Investments research analyst, Max Wadington, penned on March 6. He stated that for users to reap the benefits of the fee cut, they need to compromise on security and decentralization by opting for L2s transactions instead of Ethereum - a move that will likely attract more users to bridge assets elsewhere.
On March 5, gas fees on Ethereum's mainnet escalated to an average of 98 gwei, a figure not witnessed since early May 2023. According to Etherscan data, an average swap would incur $87.45 in gas fees, while NFT sales average $147 in gas.
Enthusiasm surrounding the upgrade has driven Ether past the sizeable $4,000 threshold on March 8 for the first time since December 2021. The globe's second-largest crypto has seen a robust climb of 14.7% weekly and an impressive rise of over 59% monthly.
Simultaneously, on March 11, Bitcoin also landed on a fresh high of $71,415, happening 36 days before the greatly anticipated Bitcoin halving event scheduled on April 20.
Published At
3/11/2024 2:36:08 PM
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