Ethereum has successfully implemented its highly anticipated Dencun upgrade on March 13, 2024,
marking a significant milestone in the network’s scaling roadmap. The upgrade, which went live at slot
8626176 on the Beacon Chain, introduces proto-danksharding via EIP-4844, dramatically reducing
data costs for Layer 2 (L2) solutions.
Proto-Danksharding Explained
The centerpiece of the Dencun upgrade, EIP-4844, introduces a new transaction type called “blob-carrying transactions.” These “blobs” (Binary Large Objects) provide L2s with a dedicated space to post their compressed transaction data on Ethereum’s main chain at a significantly lower cost.
“Proto-danksharding is essentially a lighter implementation of full danksharding that will come later,”
explains Vitalik Buterin, Ethereum co-founder, in a recent blog post. “It gives L2s a more efficient way
to store data without congesting the main chain.”
The technical implementation creates a new fee market specifically for blob space, separate from the
traditional gas fee market, preventing L2 data posts from competing directly with regular transactions.
This architecture was extensively audited by Trail of Bits, a leading blockchain security fir
Immediate Impact on Layer 2 Ecosystems
The effects on the Layer 2 ecosystem were almost immediate following the upgrade. According to data
from L2Beat, several major Layer 2 networks have already updated their systems to utilize blob
transactions, resulting in fee reductions of up to 90% for end users.
Arbitrum, currently the largest Ethereum L2 by total value locked (TVL), was among the first to
implement support for the new transaction type. Similarly, Optimism has announced that its OP Stack
now fully supports blob transactions, with the latest upgrade dubbed “Bedrock Batcher Blobs.”
“This is the most significant cost-reduction upgrade in Ethereum’s history,” states Polygon Labs CTO
David Schwartz. “We expect transaction fees on Polygon zkEVM to decrease by approximately 80-
85% once our implementation is complete.”
Implications for DeFi and NFTs
The dramatic reduction in transaction costs is expected to catalyze greater adoption across
Ethereum’s application layer. Data from DeFiLlama shows a 27% increase in total value locked across
Ethereum L2s in the two weeks following the upgrade.
NFT marketplaces on L2s have reported similar upticks in activity. Immutable X, a leading Layer 2 for
gaming NFTs, recorded a 40% increase in daily transactions according to their public analytics
dashboard.
“The fee reduction makes microtransactions viable again,” notes OpenSea‘s engineering team in their
technical blog. “This opens the door for entirely new use cases that were previously cost-prohibitive.”
Competitive Landscape: Ethereum vs. Alternatives
The successful implementation of Dencun strengthens Ethereum’s position against competing Layer 1
blockchains that have marketed themselves based on lower fees.
Messari Research analyst Ryan Watkins suggests that “Ethereum’s scaling solution is fundamentally
different from most competitors, focusing on a modular architecture rather than sacrificing
decentralization for throughput.”
While Solana continues to offer lower base-layer fees, the combination of Ethereum’s security and now
more affordable L2 solutions presents a compelling value proposition for developers and users alike.
Road Ahead: From Proto-Danksharding to Full Danksharding
The Ethereum development community views Dencun as an important stepping stone rather than the
final solution. According to the Ethereum Foundation, full danksharding remains on the roadmap, which
will further increase blob space and potentially reduce costs by another order of magnitude.
“We’re building Ethereum’s scaling solution methodically and carefully,” explains Tim Beiko, who
coordinates Ethereum protocol development. “Proto-danksharding gives us valuable data on how blob
transactions perform in production before we commit to full danksharding.”
Conclusion
The successful activation of the Dencun upgrade represents a pivotal moment in Ethereum’s evolution,
particularly for its Layer 2 scaling strategy. By dramatically reducing costs while maintaining the
network’s fundamental security properties, Ethereum has addressed one of the most significant
barriers to widespread adoption.
For developers interested in implementing blob transaction support, comprehensive documentation is
available at ETH Research and Ethereum.org.
