Dencun Upgrade Impact: Ethereum Layer 2 Transaction Fees Plummet

The recent Dencun upgrade on Ethereum has delivered on its promise of significantly reducing transaction costs across Layer 2 networks, ushering in a new era of affordability for Ethereum users.

Since the introduction of blobs, a new transaction format brought about by the upgrade, significant Layer 2 chains have experienced a notable decrease in average transaction costs.

Massive Drops in Gas Fee

Blobs serve as a revolutionary method for Layer 2 chains to post information on the Ethereum network, offering a more efficient alternative to the traditional “calldata” approach and paving the way for substantial fee reductions.

Data from various Layer 2 networks, including Optimism’s ecosystem encompassing OP Mainnet, Base, and Zora, as well as other platforms like zkSync and Starknet, all point to significant reductions in transaction fees.

For instance, on Base, the median gas fees have plummeted from approximately $0.5 on March 13 (just before the Dencun upgrade) to a mere $0.0012, according to recent on-chain data aggregated by Marcov on Dune. Similarly, average fees on Base now hover around $0.06, marking a substantial decrease.

In the Optimism ecosystem, which includes OP Mainnet, similar fee reductions have been observed, further validating the efficacy of the Dencun upgrade in driving down transaction costs.

Arbitrum One Snubs Dencun Dencun

Starknet has also experienced fee reductions, with notable examples like Argent, one of the leading wallet providers on the network, reporting average swap fees dropping to $0.04, down from over $6.8 just days prior to the Dencun upgrade.

However, it’s worth noting that Arbitrum One, one of the most widely utilized Layer 2 solutions, has yet to integrate the Dencun improvements. Nevertheless, the platform is set to unveil its ArbOS upgrade, which will introduce support for blobs to Arbitrum rollup chains.

In a recent incident, $4.5 million was stolen in an attack, resulting in significant network disruption; however, analysts anticipate Arbitrum (ARB) will climb to $1.89 by the end of March, reflecting a 1.07% increase.

Blobs Adoption Might Impact Future Fees

While the adoption of blobs has already demonstrated significant benefits in terms of fee reduction, there is a possibility of increased fees in the future as the number of rollups utilizing blobs grows. Competition for blob space is expected to intensify, potentially leading to slightly higher transaction costs down the line.

Overall, the successful implementation of the Dencun upgrade and the subsequent reduction in transaction fees signals Ethereum’s ongoing commitment to scalability and affordability, further enhancing its appeal to users and developers alike which has also been reflected in its market price.