Ethereum's Dencun upgrade expected to drive near-zero transaction fees

This upgrade marks the beginning of Ethereum’s Rollup-focused roadmap, laying the foundation for the development of the L2 platform ecosystem.

According to a research report from Fidelity Digital Assets, the upcoming Ethereum Dencun upgrade plan will be launched on March 13. This upgrade will provide users of Layer 2 (L2) solutions with the opportunity for near-zero transaction fees, which may attract more new users to join.

The upcoming upgrade marks an important step forward for Ethereum on its Layer 2 platform development roadmap. This upgrade will enable the network to function as a resilient database, thereby improving the data storage efficiency of the Layer 2 blockchain and achieving cost savings. This critical step is expected to bring greater scalability and performance to the Ethereum ecosystem, providing a better experience for users and developers. This also means that Ethereum is actively responding to the challenges it currently faces and laying a solid foundation for its future development. This move is expected to promote

Dencun upgrade will reduce costs for L2 blockchain

Max Wadington noted that the Dencun upgrade will provide Ethereum with the necessary scaling capabilities to support millions of users on the layer 2 blockchain. This would make Ethereum more suitable as a distributed database for other blockchains. The resulting upgrades are expected to attract more users to the Ethereum ecosystem, expanding the network’s total addressable market (TAM).

The upgrade is also expected to reduce the cost of Layer 2 blockchains storing data on the main network, and this cost reduction is expected to ultimately benefit users.

Layer 2 solution is a standalone blockchain built on top of Layer 1, or bottom layer, designed to solve scalability issues and manage data efficiently. However, the upgrade is not expected to have a significant impact on Ethereum users, as the promise of lower fees for Layer 2 users does not extend to users transacting on the underlying Ethereum blockchain.

Wadington explained that in the short term, users seeking to profit from this fee adjustment will need to sacrifice some decentralization and security by conducting transactions on Layer 2 solutions, rather than directly on the Ethereum network. trade. Therefore, this may encourage more users to bridge assets to other platforms.

The report adds that in the medium term, application-specific transactions on Ethereum will remain the preferred option, especially as Layer 2 platforms mature.

Ethereum PriceSurge

Ethereum surpassed $3,000 earlier this week, briefly surging above $3,900 to hit its highest price in nearly two years.

Investor sentiment reflects optimism about the upcoming Dencun upgrade and the U.S. Securities and Exchange Commission’s (SEC) approval of an Ethereum exchange-traded fund (ETF). Additionally, on-chain data shows that nearly $200 million in ETH has been burned over the past week, reducing the altcoin’s circulating supply and potentially driving prices higher.

Ethereum is trading at $3,936, according to CoinGecko data. Notably, the second-largest cryptocurrency by market cap is up more than 60% in the past month.

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