Dencun Sees L2 Fees Fall Dramatically

Ethereum's Dencun update has proven an impressive success, with gas fees on L2s dropping by an order of magnitude.

Has Dencun solved Ethereum's gas fee problems?

Ethereum's Dencun update has proven a outstanding success, with gas fees on L2 platforms plummeting to extremely competitive levels. The figures speak for themselves, and suggest that prioritizing scaling via L2 networks is likely to be vindicated as a solution for Ethereum's congestion problems in the medium term.

80% Drop In Fees

Not every Layer 2 has implemented support for EIP-4844, the update that introduces "blobs": A powerful gas-saving innovation. However, the ones that have done so are seeing massive efficiency gains.

Ethereum Dencun Update Scheduled For March 13
Dencun will reduce L2 fees with the introduction of proto-danksharding, or “blobs”.

Data from Dune Analytics shows a sharp drop-off in fees when the upgrade was activated, with gas falling by an order of magnitude.

The impact has been incredible, with Uniswap founder Hayden Adams tweeting that trading on Optimism now cost less than one cent.

Ethereum's Congestion Remains A Problem

This is particularly remarkable given the congestion on Ethereum mainnet, which pushes fees for Uniswap trades on L1 from $20 at times of relatively low activity to anything up to $100 when things are busy.

EIP-4844's chief upgrade was to replace calldata (a form of storage) with binary large objects, or blobs. Because blobs are erased from the blockchain after an interval of a few weeks, they are far cheaper in gas terms, meaning their use does not compete for block space in the same way that calldata does. The upgrade was designed specifically to make L2s more efficient.

This has taken a huge weight off L2 networks. However, Ethereum L1 is still slow and expensive to use, with gas fees making smaller transactions prohibitively expensive. Nonetheless, there is a large amount of activity that still takes place on the base layer, which is somehow seen as more legitimate (as well as more secure). Due to its network effect and its status as the base layer for the Ethereum ecosystem, there is also deep liquidity on L1.

Many traders and DeFi users are therefore prepared to pay tens or hundreds of dollars in gas fees to access these benefits, despite other options now being viable.

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