Dencun Launches Upgraded Ethereum Mainnet

The highly-anticipated Dencun upgrade has been successfully implemented on the Ethereum mainnet, marking a significant milestone for the platform’s scalability and reducing transaction fees for layer-2 networks. This upgrade, which is considered the most important hard fork since the Merge, is a step in the right direction but does not address all the limitations of layer-2 solutions, according to Arthur Breitman, co-founder of Tezos blockchain.

Dencun comes nearly a year after the Shanghai upgrade, which allowed network participants to unstake their Ether for the first time after the transition to a proof-of-stake network. The Dencun hard fork incorporates nine Ethereum Improvement Proposals (EIPs) and derives its name from the Cancun upgrade for the execution layer and the Deneb upgrade for the consensus layer.

The Cancun part of the upgrade focuses on improving transaction management and processing on the execution layer, while the Deneb part aims to enhance the consensus layer and how network participants agree on the blockchain’s state. One of the notable features introduced through the Dencun upgrade is the inclusion of data blobs via EIP-4844, also known as proto-danksharding. This feature aims to enhance data availability and reduce layer-2 transaction fees, ultimately contributing to Ethereum’s scalability as a settlement layer.

It’s important to note that the fee reductions promised by the upgrade will not directly impact Ethereum mainnet users. In a report by Max Wadington, a research analyst at Fidelity Investments, it is stated that users who want to benefit from these fee changes will need to sacrifice some decentralization and security by transacting on layer-2 solutions instead of Ethereum. This might lead to more users bridging their assets to other platforms. Ethereum is still considered the best option for application-specific purposes, especially for high-value transactions, as layer-2 platforms continue to evolve.

Despite the Dencun upgrade, gas fees on the Ethereum mainnet remain high, with an average swap costing users $86.15 and nonfungible token sales averaging $145.60 in gas fees, based on Etherscan data. This suggests that further improvements are needed to address the issue of high transaction costs.

While the Dencun upgrade is a significant step towards enhancing Ethereum’s scalability and reducing transaction fees for layer-2 networks, it does not fully resolve all the limitations of layer-2 solutions. Continued development and improvement are necessary to address the issue of high gas fees and further enhance the platform’s performance.