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Dencun Upgrade on Ethereum Mainnet

The highly anticipated Dencun upgrade was successfully rolled out on the Ethereum mainnet at 1:55 pm UTC on March 13. This upgrade is considered the most significant hard fork since the Merge and is expected to bring about substantial changes to layer-2 networks, reducing transaction fees, and enhancing Ethereum’s scalability.

Despite the positive implications of the Dencun upgrade, Arthur Breitman, the co-founder of Tezos blockchain, has raised concerns about its ability to address all the shortcomings of layer-2 solutions. He emphasized that while the upgrade extends the data usable by rollups on Ethereum, there are still limitations in terms of transaction costs and centralization measures.

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The launch of Dencun comes almost a year after the Shanghai upgrade in April 2023, which allowed network participants to unstake their Ether (ETH) for the first time following the transition to a proof-of-stake network post the Merge. The Dencun hard fork includes nine Ethereum Improvement Proposals (EIPs) and merges the Cancun and Deneb upgrades to improve transaction processing and consensus mechanisms on the Ethereum network.

One of the standout features of the Dencun upgrade is the introduction of data blobs through EIP-4844, also known as proto-danksharding. This feature aims to enhance data availability and reduce layer-2 transaction fees, positioning Ethereum as a scalable settlement layer.

Impact on User Experience and Gas Fees

Despite the promised fee reductions with the Dencun upgrade, Ethereum mainnet users may not experience immediate benefits. A report by Max Wadington from Fidelity Investments points out that users would need to sacrifice decentralization and security by transacting on layer-2 solutions to benefit from lower fees.

Gas fees on the Ethereum mainnet remain high, with an average swap costing users $86.15 in gas fees and nonfungible token sales averaging $145.60 in gas fees. This high cost of transactions underscores the need for scalability improvements like those introduced in the Dencun upgrade.

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