thereum's Dencun upgrade, scheduled for March 13th, 2024, introduces a key change called "proto-danksharding" that is anticipated to significantly reduce costs for layer 2 networks to store transaction data on the main Ethereum blockchain. By enabling "blobs" that can hold this batch of data more efficiently, the costs charged to layer 2 protocols by miners should decrease substantially.
This cost savings is then likely to be passed on to end-users in the form of lower transaction fees. However, while developers agree fees will plummet, predictions on the actual reduction amounts vary considerably.
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Impact Predictions from Leading Layer 2 Teams
Representatives from some of the largest layer 2 rollups provided their outlook on how much Dencun may decrease costs for users:
Co-founder Jordi Baylina noted prices should decline due to increased data capacity and reduced demands, however quantifying it is difficult. Baylina welcomed the upgrade as an important first step in Vitalik Buterin's scaling roadmap. Co-founder Brendan Farmer added that zero-knowledge rollups like Polygon's would see particularly low cost reductions compared to other rollup types.
Creator Steven Goldfeder stated 90% of user costs relate to layer 1 data fees, so a 10x cheaper blob price could translate to a 90% reduction. However, he cautioned competitors currently pricing layer 2 at zero is unsustainable, and market-based pricing will become more important.
CEO Eli Ben-Sasson estimated blobs could be 4x more than current usage, and if 10x cheaper, 90% of costs would decrease by that factor. As the primary Starknet developer, StarkWare has already integrated proto-danksharding support.
Coinbase protocol head Jesse Pollak forecasted demand filling 4x more blob space could make transactions "really cheap" via market pricing. Without increased usage, costs may fall 90-95%, but demand is likely to rise and stabilize fees at perhaps 2-5x lower than present levels.
Timelines and Unknowns
The Ethereum community has slated the Dencun hardfork for March 13th, with developers presently finalizing code in preparation. While fee expenditures transitioning to "blobs" is expected to significantly curb layer 2 costs, the lack of real-world usage data and market forces means predictions differ in their scale and specific reductions. Outcomes will also depend on whether demand rises to consume the lower-priced storage capability or stabilizes at a new lower cost equilibrium.
