KEY FACT: Ethereum developers have successfully gone live with Dencun on the Ethereum network. Dencun is the biggest upgrade since the Merge.
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Ethereum developers have successfully pushed through with Deneb-Cancun (short, Dencun) upgrade, which is the most anticipated hard fork on the Ethereum network, since the Merge. The Dencun upgrade was successfully rolled out on the Ethereum mainnet at 1:55 pm UTC on March 13.
This hardfork was designed to significantly reduce the transaction fees of layer-2 networks and enhance Ethereum’s overall scalability, efficiency, and security through the implementation of various Ethereum Improvement Proposals (EIPs).
In reaction, Arthur Breitman, the co-founder of the Tezos blockchain has stated that the Dencun upgrade is a step in the right direction, but won’t improve all the shortcomings of layer-2 solutions.
“The Dencun upgrade does the bare minimum to extend the data usable by rollups on Ethereum, which should lower transaction costs in these L2 solutions. This is a step in the right direction, but ultimately, rollups built on top of Ethereum remain very throughput constrained and are forced to adopt extreme centralization measures.” - Source
The Ethereum market also responded to this launch. Ether (ETH), the native coin of the Ethereum blockchain, soared past $4,000 earlier today but gave up some of those gains to trade a shade under that threshold at 10:30 a.m. Eastern. it is believed that this update would grow the Ethereum userbase too.
It is important to note that Dencun's fee reductions will not affect Ethereum mainnet users, as Max Wadington, a research analyst at Fidelity Investments noted in a March 6 report:
“In the short term, users who wish to benefit from this fee change must sacrifice some decentralization and security by transacting on L2s instead of Ethereum. This will certainly spur more users to bridge assets elsewhere. However, we strongly believe that transacting on Ethereum for application-specific purposes will still be considered the best option (especially for high-value transactions) in the medium term as L2 platforms continue to mature.”
Gas fees on the Ethereum mainnet remain high, above 72 gwei. An average swap would cost users $86.15 in gas fees, while nonfungible token sales average $145.60 in gas, according to Etherscan data.
The Dencun hard fork is an implementationon of nine different Ethereum Improvement Proposals (EIPs). The upgrade’s name combines the Cancun upgrade of Ethereum’s execution layer and the Deneb upgrade on its consensus layer. We are hopeful that this Ethereum upgrade fosters mass adoption to web3 and encourage layered building on blockchains.
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