Ethereum completes its Dencun upgrade, which lowers expenses on Layer 2 networks by storing data in “blobs”; a transaction that once cost $1 can now cost a cent
BloombergOlga Kharif
Context & Ripple Effects
Ethereum’s scaling challenge had long been visible: heavier use previously pushed smart-contract costs higher and network utilization toward 90%, as described in an earlier period of congestion and rising contract costs. Dencun shifts part of the cost burden for Layer 2 networks by introducing a cheaper way to store their data.
The upgrade matters beyond a one-off fee reduction because Ethereum’s ecosystem is increasingly organized around Layer 2 execution. Later coverage identifies the trade-off: growing Layer 2 reliance can reduce the fees collected on Ethereum’s base layer.
First-order effects
Layer 2 operators can submit transaction data at materially lower cost, enabling them to pass much lower transaction fees to their users.
Applications whose economics were constrained by roughly dollar-level transactions—especially payments and savings use cases—gain room to operate at smaller transaction sizes.
Second-order effects
Layer 2 networks face stronger pressure to convert the infrastructure saving into lower end-user fees or better application incentives, rather than retain it as margin.
If Layer 2 adoption continues, Ethereum’s role may shift further toward providing settlement and data availability while execution and user-facing competition move to rollups.
The key structural tension is whether lower transaction costs expand usage enough to offset weaker per-transaction fee capture; the related coverage shows that outcome is not automatic.
The trend: Dencun is a data-availability scaling step that trades higher on-chain fee capture for cheaper Layer 2 execution and broader application viability.
Dencun is both the most complex fork we've shipped since the Merge, and tied for “most total EIPs in a fork” with Byzantium. There were more teams than ever involved in the process, and it somehow all worked out smoothly...! Grateful to work with all of them, onto the next one🫡!
And... now that #Dencun is behind us, we're starting to see some spiciness on Ethernow. Just hit 14 marketable pending blobs, pushing Blob Contention to 233%. And we had our first block with 6 blobs (in one transaction). Details here: https://www.ethernow.xyz/... [image]
Ethereum upgrades are the most exciting events in crypto for me. I love that I get to be part of them via co-hosting livestreams and being a solo staker that helps keep the network decentralized! Dencun is done so we're now on to looking forward to the next upgrade - Pectra!
The Dencun upgrade (EIP4844) is now live, which aims to substantially lower gas across Layer 2s! 🎉 You can track the impact that the upgrade has across Layer 2s using our macro dashboards for Optimism, Arbitrum, Base, etc This is one of the few cases where less (gas) is more [ima…
The Dencun upgrade is now live on the Ethereum mainnet. Etherscan data also shows that the Ethereum mainnet block height has reached the Dencun upgrade scheduled epoch (269568). The main change after the Dencun upgrade is to significantly reduce the gas fee of Ethereum L2....
Wow, nobody missed a block in the first 64 slots of the Dencun fork. Impressive, well done node operators! Welcome to blobtown! 🐡🐡🐡. We are finalized. [image]
If you're curious on why fees haven't drastically reduced after Dencun, it's because most L2s have to approve the upgrade through governance. Dencun should be fully in affect on most L2s by latest mid next week.
We need to give praise to the Ethereum/rollup devs and everyone that helped out with Dencun. Deploying and coordinating complex code changes in live production code is difficult. Doing it on the largest decentralized compute platform is even harder. Always amazed by you all.