Dencun: Focusing on Fee Stabilization, says Fuel Founder

The recent Dencun hard fork of Ethereum, which is hailed as the largest upgrade since the Merge, was implemented on the mainnet on March 13. While many people were focused on the expected reduction in transaction fees for layer-2 (L2) scaling networks, the true advantage of the upgrade lies in fee stabilization. According to Nick Dodson, the CEO and co-founder of Fuel Labs, the goal is to expand capacity and scale rather than simply lowering fees. Several Ethereum L2s experienced a significant median transaction fee reduction of up to 99% after the upgrade, including Starknet, Optimism, Base, and Zora OP mainnet.

Although the fee reduction for L2s is a noteworthy benefit for the industry, the primary advantage of the Dencun upgrade lies in the network’s increasing scalability and the stabilization of current fees for future users. Dodson explains that as the network’s capacity grows, layer-2 fees will continue to decrease with subsequent upgrades. The implementation of the Dencun hard fork involved incorporating nine different Ethereum Improvement Proposals (EIPs). The Cancun part focused on enhancing transaction management and processing on the execution layer, while the Deneb portion aimed to improve the consensus layer, which pertains to how network participants agree on the blockchain’s state.

Dodson believes that this upgrade will significantly enhance the overall scalability and throughput of the Ethereum network. It opens up the possibility for Ethereum to accommodate a larger user base and increase throughput beyond just rollups. The layer-1 is gaining the ability to support various types of rollups and executions, leading to a substantial improvement in its capability to handle different transactions.

In the immediate aftermath of the upgrade, the price of Ether experienced a 2.44% decline in the 24-hour period leading up to 11:30 am UTC, trading at $3,956, according to CoinMarketCap data.