Discover how Ethereum's Dencun upgrade revolutionizes layer-2 transactions, slashing gas fees and opening new possibilities for on-chain development.
On March 13, Ethereum is poised to embark on its latest network upgrade, Dencun. While this event has sparked considerable excitement within the realm of Ethereum's devoted tech enthusiasts, it has yet to make significant waves in mainstream discourse, unlike the 2022 merge that transitioned Ethereum to a more energy-efficient proof-of-stake model.
However, make no mistake: According to the minds behind the largest layer-2 networks built atop Ethereum, Dencun will mark a pivotal moment in the blockchain's evolution—a shift that promises to render gas fees obsolete on scaling networks and open the door to a realm of new possibilities for on-chain development.
"This marks the dawn of a new era for Ethereum's functionality," remarked Karl Floersch, CEO of OP Labs, the entity behind layer-2 network Optimism, in conversation with Decrypt.
"Since 2015, there has been a period of stagnation in terms of user experience and capabilities—a phase that necessitated significant foundational research," he continued. "That groundwork has been laid, and now it's time for implementation."
Several other layer-2 developers who spoke with Decrypt echoed similar sentiments, underscoring how Dencun will propel Ethereum into uncharted territory by significantly reducing the cost and complexity of layer-2 transactions.
David Silverman, VP of Product at Polygon Labs, anticipates a substantial drop in gas fees across most layer-2 networks within a month or two of Dencun's launch, provided networks pass on those savings to users.
Terence Tsao, a developer at Offchain Labs, which builds Arbitrum, expressed confidence that gas fees on layer-2 networks could plummet by as much as 75% immediately following the implementation of Dencun, given the current network traffic levels.
But how will gas prices plummet so swiftly? The answer lies in "blobs," which will introduce a new temporary method for data storage on Ethereum through proto-danksharding. This process will allow layer-2 data to be stored temporarily for about a month, significantly reducing costs while maintaining security.
According to Silverman of Polygon Labs, this change will transform Ethereum from a rural backroad into a four-lane highway, with the potential for expansion into a 16-lane network in the future.
Post-Dencun, gas fees may become negligible to the point where crypto companies and projects cover their costs to attract users, similar to how Web2 giants like Google cover the costs of services like video conferencing and email.
"We're entering a realm where most users won't even experience gas fees," remarked Silverman. "It becomes abstracted away."
It's worth noting that this gas-free future will exist primarily on layer-2 networks, not the Ethereum mainnet. However, the majority of retail user traffic is expected to permanently shift away from Ethereum proper and onto layer-2 networks like Arbitrum, Optimism, and Polygon.
Terence Tsao of Offchain Labs believes that Dencun will signify a significant shift in how users interact with Ethereum, with the mainnet fading into the background as layer-2 networks take center stage for most on-chain transactions.
According to Karl Floersch of OP Labs, Dencun will revolutionize application development and existence on-chain.
"We've never witnessed a world where block space is abundant," he remarked. "We've never seen the kinds of applications that people can build."
Floersch anticipates a renaissance of cross-pollination across various mediums, sites, and platforms, where integrating on-chain elements with any product becomes seamless and cost-effective.
"I've been dreaming of this moment," he exclaimed. "I'm thrilled for the world to experience the potential of crypto."