Ethereum Dencun Upgrade: Reshaping L2 Ecosystem and Transaction Cost

Ethereum is set to undergo the Dencun upgrade on March 13th, a highly anticipated upgrade that is expected to have a significant impact on L2 networks and gas fees. Developers generally believe that this will become an important milestone for the Ethereum ecosystem, especially for L2 networks.

The core content of the Dencun upgrade is EIP-4844, also known as "proto-danksharding". This technology will introduce a new type of transaction category that reduces the cost of rollup transactions through data blobs. These blobs can temporarily store data, significantly lowering the cost of data storage for L2 networks on Ethereum, ultimately benefiting users.

Impact on L2 Networks

Different L2 solutions have varying opinions on the impact of the Dencun upgrade:

• Developers of an optimistic rollup network believe that Dencun will help reduce L1 costs, but each ecosystem will independently decide how to price and process data on L1 and L2.

• The development team of a certain ZK rollup network has stated that they have been preparing the infrastructure for the launch of proto-danksharding. They expect that if the blob price decreases by 10 times, the cost could drop by 90%.

• The creator of a certain L2 network estimates that the open blob space provided by proto-danksharding is about four times the current usage of Ethereum rollups. At current demand levels, transaction costs could decrease by 90% to 95%. However, low costs may stimulate an increase in usage, and the eventual fees could be 2 to 5 times lower than they are now.

• A co-founder of another L2 solution provider stated that the decline in fees is mainly a supply and demand issue, but the specific extent is difficult to predict. They also pointed out that there are differences in data storage costs between ZK rollups and optimistic rollups.

Impact on gas fees

Experts generally believe that the Dencun upgrade will significantly reduce gas fees, improve user experience, and enhance scalability. Some L2 developers predict that once all L2 networks update their settlement contracts, users will be able to save a substantial amount on gas fees.

Some developers estimate that at the current level of network traffic, gas fees on L2 networks could immediately decrease by 75%. This is mainly attributed to the introduction of "blobs" and proto-danksharding, which provide a more cost-effective data storage method for Ethereum.

A partner of a well-known non-custodial Ethereum Staking service provider stated that the most important aspect of the Cancun upgrade is significantly reducing the gas fees for L2, which may also lead to a slight decrease in gas fees on the Ethereum mainnet.

The Revolution of Transaction Efficiency and Cost

The expected decrease in gas fees could have far-reaching effects. Experts envision an abstract gas fee scenario, similar to how Web 2 giants attract users by absorbing service costs. While the vision of zero gas fees mainly exists on L2 networks, the Ethereum mainnet will continue to play a key role in ensuring data security and facilitating inter-network communication.

Some developers believe that the Dencun upgrade will fundamentally change the way users interact with Ethereum, with the mainnet potentially gradually moving to the background. This shift will eliminate the high on-chain transaction costs, making activities such as NFTs more accessible.

Experts predict that by eliminating the barriers to integrating on-chain elements, cross-chain development can be promoted across various media and platforms. For example, a video game that generates NFTs may interact with DeFi protocols and seamlessly utilize social media at minimal cost.

Development Trends Centered Around Rollup

The Dencun upgrade represents Ethereum's shift towards an L2-centric scaling approach. Ethereum aims to slow down changes to its core components, focusing innovation and user-level priorities on L2. Major rollup participants have already begun coordinating with each other at L2 conferences to discuss and propose improvements.

With the implementation of EIP-4844, the ecosystem will begin to see the true impact of proto-danksharding. However, it is worth noting that as more L2s with blob space are added, the impact of reduced costs may gradually weaken.

Conclusion

The Dencun upgrade is expected to usher in a new era of scalability and low-cost transactions on the Ethereum chain. It will further promote innovation and adoption of L2 networks, fundamentally changing the way users interact with the Ethereum ecosystem. This upgrade will not only significantly reduce gas fees but also improve related functionalities, paving the way for the future development of Ethereum.