Ethereum’s forthcoming major upgrade, known as “Dencun,” is set to roll out on March 13, promising an immediate 75% reduction in gas fees on layer 2s, as indicated by developers.
The introduction of a new technological feature named proto-danksharding, also referred to as blobs, is credited with achieving this significant enhancement in scalability.
Proto-danksharding works by channeling a portion of the data from Ethereum’s layer 2s into temporary storage units called “blobs,” which can hold data for up to one month. This process helps alleviate some of the validation workload, resulting in cost-effective and expedited transactions.
According to David Silverman, Vice President of Product at Polygon Labs, gas fees could potentially decrease to a level where crypto companies and projects find them manageable, as highlighted in an interview with Decrypt.
Post-Dencun, gas fees are not only expected to diminish significantly but may even reach a point where they are covered by crypto companies and projects.
Silverman envisions a future where gas fees become inconsequential for most users, ultimately becoming abstracted from their experience.
Following the implementation of Dencun, a significant portion of the network’s retail users are expected to migrate to layer 2s, attracted by the lower fees.
Terence Tsao, a developer at Offchain Labs involved in Arbitrum, described Dencun as a transformative event, signifying the transition of Ethereum’s mainnet to a less prominent role in the foreground, while still serving as the backbone for the entire layer 2 network.
Post-Dencun: Could 2024 Be Ethereum’s Breakout Year?
The narrative surrounding Bitcoin’s exchange-traded fund (ETF) was the primary catalyst for crypto prices throughout the latter part of 2023 and well into the beginning of 2024.
Spot Bitcoin ETFs function as investment vehicles that purchase and hold significant quantities of the leading cryptocurrency. They also issue and redeem their own publicly-traded shares, providing traditional Wall Street investors and individuals with brokerage accounts an accessible route to crypto investment within a regulated framework.
This aspect alleviates concerns for investors compared to directly purchasing and storing the asset.
Following the Securities and Exchange Commission’s (SEC) series of approvals for spot Bitcoin exchange-traded funds (ETFs) in January, both crypto and ETF analysts anticipate the approval of spot Ethereum ETFs for several reasons.
Standard Chartered Bank, a multinational based in London, recently suggested that approval could occur before May 23 of this year. This date coincides with the SEC’s deadline for rendering a decision on the first recent filing for a spot Ethereum ETF. The SEC’s approval of Bitcoin ETFs by its January 10 deadline this year adds credence to this speculation.
However, Ethereum presents a different scenario as the SEC has previously stated that Bitcoin is not classified as a security. The regulator’s stance on Ethereum’s classification has been less definitive. If the SEC deems Ethereum a security, it would pose greater challenges for ETF approvals, as the SEC would assert heightened oversight over the underlying asset.
A potential complication arose last month when Prometheum, the sole SEC-approved crypto firm in the US, announced the upcoming launch of its inaugural crypto product in late March: Ether custody.
Analysts believe that Prometheum’s move could prompt the SEC to provide clarity on whether Ethereum is considered a security or not.
