How This Ethereum Update Could Slash Transaction Fees 100x
The incoming Dencun fork heralds a new era for Ethereum, which could significantly lower transaction fees by as much as 100 times.
This pivotal upgrade, backed by the unwavering support of Coinbase’s Base layer 2 network from day one, aims to tackle one of the most pressing challenges in the blockchain space: high transaction fees.
Addressing Ethereum Transaction Fees
The Dencun upgrade, scheduled for March 13, is set to revolutionize the blockchain industry by enhancing efficiency and scalability, with EIP-4844 or proto-danksharding at its core.
Base, in collaboration with Optimism, the Ethereum Foundation, and other key Ethereum core development teams, has been at the forefront of this transformative initiative. Over the past two years, these teams have dedicated themselves to EIP-4844, aiming to increase data availability capacity for rollups.
Read more: What Is the Ethereum Cancun-Deneb (Dencun) Upgrade?
This effort is expected to dramatically drive down transaction fees for Ethereum L2 solutions like Base.
“We believe that fast, affordable transactions on a secure, decentralized L2 are critical to enabling everyone, everywhere to come onchain,” stated a spokesperson from Base.
Ethereum’s average transaction fees have soared to nearly $2.30, reflecting an almost 200x increase from the previous year. This highlights the urgency for scalable, cost-effective solutions.
Dencun to Bolster Layer 2 Solutions
The Dencun upgrade introduces blob-carrying transactions, a novel approach that drastically reduces the data storage footprint on the consensus layer by storing data off-chain and referencing it through a hash. This method simplifies transaction verification while significantly lowering costs. Analysts expect transaction fees to drop to as low as $0.02.
A significant fee reduction should accelerate the adoption of Ethereum’s roll-up roadmap. It should also make L2 solutions far more attractive and competitive.
“This long-awaited upgrade is forecast to cut costs for Ethereum’s L2s by at least 10x, making Ethereum more scalable and efficient,” notes Lucas Outumuro, Head of Research at IntoTheBlock.
Read more: A Beginner’s Guide to Layer 2 Scaling Solutions
For this reason, the blockchain community eagerly awaits the Dencun upgrade. The initiatives by Base and its peers highlight the collective effort towards a more scalable, efficient, and cost-effective ecosystem.
Overall, this collaborative spirit is paving the way for new applications and use cases, from on-chain gaming to closed-limit order book exchanges, thereby fostering a more vibrant on-chain economy.
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