Ethereum (ETH)'s highly anticipated Dencun upgrade, scheduled for March 13, is poised to be a landmark event for the network.
Ethereum (ETH)'s highly anticipated Dencun upgrade, scheduled for March 13, is poised to be a landmark event for the network. Unlike previous upgrades, however, Dencun's impact won't be directly felt by Ethereum holders themselves.
Dencun's core innovation lies in EIP-4844, also known as proto-danksharding. This paves the way for significantly lower gas fees on Ethereum's layer 2 (L2) networks. L2 networks process transactions in batches before finalizing them on the Ethereum mainnet. Dencun introduces a new transaction type called "blobs" that allows L2s to store large amounts of data more efficiently on the mainnet.
The beneficiaries of this upgrade are L2 networks like Polygon, Arbitrum, and Optimism. These platforms are expected to see a significant reduction in transaction costs.
"This upgrade signifies a shift in Ethereum's focus," explains Max Wadington, a research analyst at Fidelity Digital Assets. "The network is moving from directly servicing users to empowering other blockchains."
Fidelity's research report highlights that Dencun will increase hardware requirements for Ethereum node operators by a moderate amount – 100GB of additional SSD storage and 64kbps of bandwidth. Compared to current requirements of 2TB storage and 25mbps bandwidth, these are negligible increases and shouldn't hinder Ethereum's decentralization. Currently, L2 submission fees contribute roughly 10% of total fees on the Ethereum mainnet. This figure is expected to decline significantly after the Dencun upgrade goes live.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators.
This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.
The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
