Impact Analysis One Week After Ethereum Dencun Upgrade

On March 13, 2024, the Ethereum network completed the Dencun upgrade, marking an important milestone in its development. This upgrade has significantly reduced costs for Ethereum's Layer 2, opening up vast possibilities. This report analyzes the impacts observed one week after the Ethereum upgrade, focusing on cost reduction, improved network performance, and its profound effects on the entire Ethereum ecosystem.

Until the Dencun upgrade on March 13, 2024, the Ethereum market continues to be highly sought after.

Reduction of Fees and Improvement of Network Efficiency

EIP4844 integration

The Dencun upgrade introduces EIP4844, aiming to address Ethereum's high fees and slow processing times by implementing data blobs. Although it is still being integrated into the rollup process due to technical difficulties, significant improvements in Layer 2 gas fees have already begun to emerge.

Transaction fees have significantly decreased on various L2 platforms:

Change in average transaction fees: median decreased by 50%-99% (date is March 14)

$0.14 $0.03 $0.01 $0.1 $0.001

The cost of publishing data on L2 has significantly decreased:

Layer 2 has successfully reduced the cost of publishing data on Ethereum by 88% by turning to data blocks for data publishing, lowering the expense from as much as $400 per transaction to about $40.

Mainnet Gas Fees Not Reduced: Currently, Ethereum Gas prices have not been significantly affected. However, with the continued adoption of the Blob API, a reduction in Ethereum Gas fees may be observed. The decrease in fees can be attributed to several factors, including the shift of rollup demand towards blobs, which frees up capacity for the Ethereum execution layer, as well as the separation of Ethereum Gas fees from Blob fees.

Future Outlook and Danksharding

Danksharding, as a key part of the Ethereum upgrade path, promises to further enhance network capacity and performance. Planned improvements include increasing the number of data blocks per block and exploring advanced data availability (DA) solutions like PeerDAS. At the same time, research on MEV resistance, Verkle trees, and network optimization is also ongoing, aiming to create a more efficient and user-friendly Ethereum ecosystem.

Opinion

As stakeholders in the growth of Ethereum, industry insiders are excited about these new development directions. The Dencun upgrade's focus on reducing costs, scalability, security, and usability not only fosters the formation of a more inclusive ecosystem but also paves the way for more innovative and complex applications such as games, social finance (SocialFi), decentralized finance (DeFi), and cross-chain interoperability.

Emerging Trends and Competitive Environment

• Due to the reduction in fees, application chains will return to Ethereum in the form of rollups, and with the emergence of new L2 and L3 solutions, this will mark a significant transformation within the Ethereum ecosystem.

• The competition among L2 solutions has intensified, emphasizing the importance for founding teams to focus on users and developers, and to prioritize community building, infrastructure development, and comprehensive growth strategies (including business development, sales, and marketing strategies).

Ethereum Side Note

• The emergence of Eigenlayer has brought the ability to expand connections to numerous protocols within the Ethereum ecosystem, introducing greater flexibility and diversity, thereby ensuring the ecosystem becomes more agile and highly adaptable, further enhancing the resilience and scalability of the entire ecosystem.

• The pending approval of the ETH ETF and the SEC's decision on the classification of Ethereum will have a significant impact on the asset's exposure in traditional markets. The industry is closely monitoring developments related to this event.

Conclusion

The industry continues to devote itself to supporting the development journey of Ethereum, providing comprehensive assistance to projects at the forefront of decentralized data innovation. By promoting the advancement of cutting-edge technologies, it aims to contribute to the long-term success and expansion of the Ethereum ecosystem. The industry believes that with technological advancements and the continuous efforts of the community, Ethereum will be able to unlock more potential, bringing greater value and possibilities to users and developers.