Ethereum’s big Dencun upgrade has happened. The main goal is to make using the network cheaper. This mostly affects Layer 2 solutions, which are built on top of Ethereum.
What is Dencun?
Dencun is a combination of two upgrade names: Deneb and Cancun. It’s a set of changes for the Ethereum network. Think of it like a software update for your phone, but for the entire Ethereum blockchain.
What are Layer 2s?
Ethereum can get crowded. When lots of people use it at once, transaction fees, called gas fees, go up. Layer 2 solutions are like express lanes built on top of Ethereum. They process transactions off the main chain but still use Ethereum’s security. This makes transactions faster and cheaper. Examples include Arbitrum, Optimism, and zkSync.
How Dencun Lowers Fees
The key part of Dencun for lower fees is called proto-danksharding, or EIP 4844. This feature creates a new way for Layer 2s to send data to the main Ethereum chain.
- Before Dencun, Layer 2s had to bundle their transaction data and post it as regular transactions on Ethereum. This was expensive.
- With proto-danksharding, Layer 2s can use a new, cheaper method called “blobs.” These blobs hold data specifically for Layer 2s.
Because posting data in blobs is much cheaper than posting it as regular transactions, Layer 2 networks can pass these savings onto their users. This means your transactions on Arbitrum, Optimism, and other Layer 2s should become significantly less expensive.
What This Means for You
If you use decentralized applications (dApps) on Layer 2 networks, you should start seeing lower gas fees. This makes using crypto more affordable, especially for small transactions. It could encourage more people to use these networks for everyday activities.
For example, if you’ve been looking into ways to make crypto swaps cheaper, using a Layer 2 network after the Dencun upgrade is likely to be your best bet. While not directly related to Dencun, understanding how networks like Optimism handle transactions can give you context on Layer 2 benefits. You can learn more about making crypto swaps gas-free with smart wallets on Optimism to see existing Layer 2 advantages.
The Dencun upgrade is a big step for Ethereum. It makes the ecosystem more efficient and accessible. This is good news for anyone using dApps or trading on Layer 2 networks.
