he Dencun upgrade was successfully implemented on the Ethereum mainnet on March 13, 2023 at 13:55 UTC. As one of the most anticipated hard forks since the Merge, Dencun brings important improvements to both the consensus and execution layers of the Ethereum network. Its name is derived from combining aspects of the Cancun upgrade for transaction handling and the Deneb upgrade focused on consensus. This significant step aims to reduce layer 2 transaction fees and enhance Ethereum's scalability overall.
Improving Data Availability
One of the most notable features of Dencun is the introduction of data blobs via Ethereum Improvement Proposal 4844, also known as proto-dank sharding. By enhancing data availability, a crucial component for establishing Ethereum as a scalable settlement layer, proto-dank sharding intends to lower fees for layer 2 transactions. James Wo, CEO of Digital Finance Group, stated that this constitutes a
"Move toward establishing Ethereum as a scalable settlement layer."
Benefits for Layer 2, Not Mainnet
However, as Max Waddington of Fidelity Investments noted in a report, any fee reductions brought about by Dencun won't directly impact users of the Ethereum mainnet in the short term. Those wishing to benefit from lower costs must engage with layer 2 solutions, which currently require sacrificing a degree of decentralization and security. This will likely spur further growth of layer 2 platforms as Dencun enhances their affordability and accessibility over time.
Room for Further Improvement
While Dencun makes important strides, as Arthur Breitman of Tezos pointed out, it doesn't remedy all constraints of layer 2s built on Ethereum. Rollups remain throughput-limited and reliant on centralization measures for efficiency. Progress is being made step-by-step, but more upgrades will be needed to reach Ethereum's vision of robust scalability at the settlement layer. For now, gas fees on Ethereum mainnet stay elevated according to Etherscan, averaging over $86 for a swap and $146 for an NFT sale.
