- Dencun upgrade has lowered gas fees on Ethereum layer-2 networks via proto-danksharding, which allows temporary data storage
- Most layer-2 networks have seen 2-3x transaction volume increases with fees around $0.01 or less after integrating Dencun
- It’s unclear if reduced layer-2 fees will shift significant traffic away from Ethereum mainnet, which remains steady
The Dencun upgrade has significantly reduced transaction fees on Ethereum layer-2 networks through the use of a novel data storage solution called proto-danksharding. However, it remains to be seen if this will shift users away from the costly Ethereum mainnet.
How Proto-Danksharding Works
Proto-danksharding allows layer-2 data to be temporarily stored on-chain in blobs for about a month, rather than permanently. This has enabled gas fees on networks like Arbitrum, Starknet, Optimism and Base to drop to fractions of a penny.
Current State of Layer-2 Networks
Most layer-2s have seen their transaction volume double or triple after integrating Dencun, even as their fees remain around $0.01 or less. Polygon has yet to fully integrate the upgrade. Criticisms have emerged that fees may rise with increasing network demand.
The Path Forward
Developers hope sustained low fees will shift users away from the Ethereum mainnet. However, mainnet activity remains steady for now. It remains to be seen whether layer-2 networks can peel significant traffic away from layer-1.
Conclusion
While still early, Dencun has drastically reduced fees on layer-2 networks as intended. But the upgrade’s ultimate impact on the Ethereum ecosystem is still unfolding.
