Discover how the Dencun upgrade drastically reduces transaction costs on Ethereum Layer-2 networks, opening new possibilities for crypto users. Stay updated with the latest crypto news.

Recent developments in Ethereum Layer-2 networks such as Optimism, Zora, and Base have led to a significant drop in median transaction costs following the implementation of the Dencun upgrade.

Jesse Pollak, leading the L2 Base project under Coinbase's wing, emphasized the remarkable impact, noting that transaction fees now necessitate additional decimal places in wallets due to their reduction to less than a penny.

In an illustration shared on X, Pollak showcased how a transaction previously costing $0.31 now appears as $0.00 but actually amounts to $0.0005.

Following two years of intensive effort, blobs have finally gone live on @base.

Pre-Dencun: $0.31
Post-Dencun: $0.00 (though actually $0.0005)

Wallets must adapt to accommodate these reduced costs! pic.twitter.com/solIX9D4HM

— Jesse Pollak (jesse.xyz) 🛡️ (@jessepollak) March 14, 2024

Pollak isn't the only one astounded by the transformative effect Dencun has had on Ethereum L2s. Coinbase CEO Brian Armstrong shared his excitement on X, highlighting how the reduction in transaction fees and confirmation times will broaden the utility of crypto, marking a significant stride towards scalability.

However, it's important to note that not all L2s are fully prepared to capitalize on the benefits of the Dencun upgrade.

The primary Optimism account on X displayed a screenshot, underscoring its position as one of the most cost-effective L2s for users, at least for the time being.

✨🔴✨🔴✨🔴✨🔴✨🔴✨ pic.twitter.com/YbSkpuRtIn

— Optimism (@Optimism) March 14, 2024

The Dencun upgrade brought about proto-danksharding, allowing for the division of large data sets into smaller fragments to expedite processing. This enhancement translates into lower operational costs for L2 networks, resulting in reduced transaction costs for end users.

This modification, colloquially referred to as 4844 in reference to EIP-4844, or the advent of blobs, introduces binary large objects (blobs) to Ethereum. Blobs serve as carriers for substantial data volumes without necessitating direct interaction with smart contracts or L2 networks.

But why the shift to blobs?

Previously, L2 networks processed data in large batches, sending transaction receipts back to Ethereum. However, this method, relying on calldata, proved imperfect, as it required processing by all Ethereum nodes and incurred permanent blockchain storage costs, driving up operational and transaction expenses.

Blobs of data can now be appended to transaction blocks and automatically deleted after a few months. Moreover, their storage method renders them cheaper to process than calldata.

Anthony Sassano, a core Ethereum developer and host of The Daily Gwei podcast, cautioned that transaction costs may not remain as remarkably low as they are presently.

While gas prices for blob-enabled L2s are currently very affordable, we can anticipate a slight increase over time as demand for blobs rises.

This is to be expected and underscores that 4844 is just the beginning—blobs represent an evolving primitive and are integral to the broader danksharding roadmap.

— sassal.eth/acc 🦇🔊 (@sassal0x) March 14, 2024

"While gas prices for blob-enabled L2s are currently very affordable, we can anticipate a slight increase over time as demand for blobs rises," he stated. "This is to be expected and underscores that 4844 is just the beginning—blobs represent an evolving primitive and are integral to the broader danksharding roadmap."