By
Svetlana Soroka
April 26th, 2024
The highly anticipated Dencun upgrade has dramatically reduced Ethereum’s Layer-Two (L2) transaction fees, thus enabling mass adoption of Web3 platforms.
The Ethereum (ETH) network has over the years improved its infrastructure to seamlessly on-board millions of web3 users around the world. After successfully transitioning from the power-hungry Proof-of-Work (PoW) consensus to a more sustainable Proof-of-Stake (PoS) method through the merge event and the Shanghai upgrade, the Ethereum network has doubled further.
On Wednesday, the Ethereum core developers activated the much-awaited Dencun upgrade on the mainnet at epoch 269568.
As a result, the Ethereum-based layer two (L2) networks – led by Arbitrum (ARB), Optimism (OP), Polygon (MATIC), and Starknet (STRK), among others – can now offer competitive transaction fees.
Ethereum L2 Reacts Promptly
According to a screenshot shared by Starknet’s official X account, the Starknet network synchronized the Dencun upgrade on Wednesday. As a result, the Starknet gas fee dropped to about $0.01-0.04. Previously, a single gas transaction on the Starknet network was around $2, thus representing a decrease of about 99 percent.
gm blobs.
happy swapping pic.twitter.com/1vZH6K0xhJ
— Starknet 🦇🔊 (@Starknet) March 13, 2024
Similarly, Coinbase Global Inc (NASDAQ: COIN) – backed L2 BASE activated the Dencun upgrade on Wednesday, thus dramatically lowering the transaction cost.
Excited to see this go live! Layer 2 and EIP-4844 are helping crypto scale. https://t.co/G8YLtLgscc
— Brian Armstrong 🛡️ (@brian_armstrong) March 14, 2024
The Ethereum network still has a lot of work to ensure a competitive advantage over other layer-one blockchains like Solana (SOL), Cardano (ADA), Tron (TRX), and BSC, among others. Moreover, most of the layer one blockchain offer very low transaction fees at scale and also incentivize web3 developers to build decentralized applications on their respective networks.
According to market data provided by l2beat, the Ethereum network has about 45 layer two scaling solutions that are built using different technologies including StarkEx, and zkSync Lite code, among others. As a result, Ethereum users can rest assured all transactions on the consensus layers are affordable despite network congestion on the settlement layer.
“We have been working on scaling Ethereum for nine years. And we have obviously not been able to keep up with demand. We are kind of leaving a phase, which is the scalability research phase. And now we’re entering the scaling engineering phase,” Optimism co-founder, Karl Floersch, noted.
ETH Price Action and Market Outlook
Ethereum (ETH) price has closely been following Bitcoin’s price action in the recent past amid the ongoing crypto bullish outlook. The large-cap altcoin with a fully diluted valuation of about $475 billion, has significantly benefited from the notable growth of its web3 ecosystem.
According to market data provided by Defillama, the Ethereum network has about $56 billion in Total Value Locked (TVL) and more than $77 billion in stablecoins market capitalization. As a result, ETH price has gained about 50 percent in the past four weeks to trade around $3,996 on Thursday.
If the crypto bullish outlook continues in the coming weeks, ETH price will likely reach a new all-time high (ATH) just like Bitcoin.