Key Points
- The Ethereum network has activated the Dencun upgrade, improving its infrastructure for web3 users.
- The upgrade has led to significantly lower transaction costs on Ethereum-based layer two networks.
The Ethereum (ETH) network continues to enhance its infrastructure to better accommodate millions of web3 users globally. The network has made significant strides, transitioning from the energy-intensive Proof-of-Work (PoW) consensus to the more sustainable Proof-of-Stake (PoS) method via the merge event and the Shanghai upgrade. This has resulted in the Ethereum network’s expansion.
The much-anticipated Dencun upgrade was activated on the mainnet by Ethereum’s core developers on Wednesday at epoch 269568. This upgrade has enabled Ethereum-based layer two (L2) networks, including Arbitrum (ARB), Optimism (OP), Polygon (MATIC), and Starknet (STRK), among others, to offer competitive transaction fees.
Response to the Dencun Upgrade
Following the activation of the Dencun upgrade, the Starknet network quickly synchronized the upgrade. As a result, the Starknet gas fee dropped to approximately $0.01-0.04, a significant decrease from the previous $2 per gas transaction, representing a decrease of about 99 percent.
In addition, L2 BASE, backed by Coinbase Global Inc (NASDAQ: COIN), activated the Dencun upgrade, leading to a dramatic reduction in transaction costs.
The Ethereum network still faces the challenge of maintaining a competitive edge over other layer-one blockchains such as Solana (SOL), Cardano (ADA), Tron (TRX), and BSC. These blockchains offer low transaction fees at scale and incentivize web3 developers to build decentralized applications on their respective networks.
According to data from l2beat, the Ethereum network has approximately 45 layer two scaling solutions built using various technologies, including StarkEx and zkSync Lite code. This allows Ethereum users to carry out affordable transactions on the consensus layers, despite network congestion on the settlement layer.
Ethereum Market Performance
The price of Ethereum (ETH) has been closely following Bitcoin’s price trend amid the current bullish crypto outlook. The altcoin, with a fully diluted valuation of about $475 billion, has significantly benefited from the notable growth of its web3 ecosystem.
Data from Defillama shows that the Ethereum network has about $56 billion in Total Value Locked (TVL) and more than $77 billion in stablecoins market capitalization. Consequently, the price of ETH has increased by about 50 percent in the past four weeks, trading around $3,996 on Thursday.
If the bullish crypto outlook persists in the coming weeks, the price of ETH is likely to reach a new all-time high (ATH), similar to Bitcoin.
