Sirwin
Sirwin

Ethereum Dencun to Kill L2 Fees


The most anticipated Ethereum update is around the corner. According to the calculations, it is going to take place on March 13 and the fork will bring drastic changes to the mainnet. First of all, this update will not have a huge impact on Layer 1, however, it may cut down the transaction fees on Layer 2s up to 90% or more!

Image from thread

The Ethereum Layer 2s are harshly criticized for their transaction fees because many other Layer 1s, such as SUI, APTOS, AVAX, SOL, and others, can let us use the blockchain for a couple of cents. Yet, Dencun update may end all these criticisms soon.

What to expect from Dencun?

Actually, the Layer 2s contribute a lot to Ethereum's growth with the TVL and the developments with Layer 3 projects. However, the cost of transaction traffic brings another issue of scalability for them as well.

Dencun is the first step to making Layer 2s as ideal as we imagined. The chart below clearly shows what kind of drastic changes we are going to witness.

Image from thread

by Whale1 Eth on X

As you see, the mainnet fee stays the same whereas the fees go as low as 2 cents.

In this case, there will be a question that people ask themselves: As Ethereum is one of the most secure and decentralized chains, why would people use SOL or AVAX for " cheap " transactions?

Some crypto degens think in the same way. Of course, the cheap Layer 2s cannot kill the other Layer 1 projects but there might be a slight shift from other Layer 1 projects to Ethereum L2s.

Image from thread

GrayScale Research

Have a look at the number of daily transactions and 2023 revenue of Optimism and Arbitrum as the top 2 Ethereum Layer 2 projects. Under today's conditions, these are amazing numbers.

With the integration of Dencun, the Layer 2s will play less fees while interacting with root contract because the update will ask for less data, so do lower transaction fees, from the Layer 2. In this way, the revenue made by Arbitrum, Optimism, Starknet, zkSync, and all other Layer 2s will drop drastically. I believe we will see the positive impact on the prices, as well 😉

Depending on the way to secure the network, Layer 2s' transaction fees may vary. However, the Dencun fork is going to be fascinating for the Ethereum ecosystem as the leading EVM Layer 1 project.

What do you think about the update on Ethereum mainnet?

Share your expectations from Dencun and future Layer 2s 👇

 

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