Ethereum Dencun Upgrade: A "Timely Rain" for Fee Reduction and Scalability

If you’ve recently been using layer-2 networks like Arbitrum and Optimism, you might have been caught by high gas fees. But the good news is that the Ethereum Dencun upgrade officially went live on March 13, 2024, and this upgrade’s power exceeds expectations—especially for layer-2 network fees, which could be cut in half directly.

Why is Dencun so important? A table to help you understand instantly

The Ethereum ecosystem has long faced a tough problem: gas fees are too high, and the network is too congested. Although layer-2 solutions have been working hard to divert traffic, fundamentally, there’s still no “big move.” The Dencun upgrade is this big move—it introduces Proto-Danksharding technology (EIP-4844 proposal), giving the network a “super compressor.”

What are the core changes?

After the upgrade, Ethereum no longer “squeezes dry” every data block as before. The new “blobs” (binary large objects) mechanism allows layer-2 transactions to store data directly on the mainnet without competing for precious transaction space. It’s like opening a dedicated green channel for couriers—fast and cheap.

Data speaks: How much can Dencun reduce fees?

According to official expectations, EIP-4844 can reduce layer-2 gas fees by 10-100 times. This is not wishful thinking—mainstream layer-2s like Arbitrum, Optimism, and Polygon have already demonstrated this with post-upgrade data:

Pre-upgrade costs (reference data):

• Arbitrum ETH transfer: $0.24
• Optimism ETH transfer: $0.47
• Polygon ETH transfer: $0.78
• Token swap costs approximately $0.67, $0.92, $2.85 respectively

Expected post-upgrade: these numbers could be directly slashed by one or two zeros. For users frequently interacting with DeFi contracts, this means a significant reduction in real costs.

What technological innovations does Dencun include?

This upgrade isn’t just a tweak; it’s a “full check-up.” Besides the main feature EIP-4844 (Proto-Danksharding), some supporting EIPs also contributed:

EIP-1153 (Temporary Storage Optimization) - Provides a “temporary warehouse” for intermediate data during smart contract execution, reducing redundant calculations and gas consumption

EIP-4788 (Beacon Chain Integration) - Makes consensus layer information more accessible to application layers, improving on-chain protocol efficiency

EIP-5656 (Memory Copy Acceleration) - Optimizes MCOPY instruction, significantly speeding up data copying during contract execution

EIP-6780 (Security Reinforcement) - Restricts the use of SELFDESTRUCT, closing security loopholes in contracts

EIP-6493 (Block Validation Improvements) - Adjusts validator block selection logic, reducing centralization risks

Will layer-2 networks usher in a “second spring”?

This is the most concerned question for all layer-2 players. The answer might be “yes.”

The main changes brought by the upgrade are reflected in three aspects:

1. Cost Optimization - No need to say more; lower fees mean marginal costs for dApps drop sharply, small transactions go from “not worth it” to “completely feasible”

2. Data Throughput Increase - Ethereum mainnet currently handles about 15 TPS (transactions per second). With Dencun and layer-2, the entire ecosystem’s processing capacity could surpass 1000 TPS

3. Application Ecosystem Prosperity - When fees are no longer a limiting factor, developers will be motivated to innovate: small loans, micro-payments, on-chain gaming, and other long-suppressed applications by gas fees will be unleashed

But don’t get too optimistic—Fidelity reports that layer-2 currently accounts for only about 10% of Ethereum’s total gas fees. Dencun will change this ratio, but the specific extent depends on market adoption speed.

What does this mean for ordinary users and developers?

For users:

• Significantly lower interaction costs, making frequent transactions feasible
• Improved staking experience (Shanghai upgrade laid the foundation, Dencun adds the finishing touch)
• Small DeFi strategies shift from “theoretically feasible” to “economically feasible”

For developers:

• Blobs provide a stable data storage capacity of 1MB/slot, enabling high-frequency applications without limitations
• Optimizations like EIP-1153 reduce contract execution costs, making complex logic easier to implement
• Layer-2 friendliness is greatly enhanced, smoothing out pain points in cross-chain application development

Where does Dencun stand on the Ethereum 2.0 roadmap?

If Ethereum 2.0 is viewed as a “major renovation”:

• December 2020 - Beacon Chain launched (PoS consensus layer online)
• September 2022 - The Merge completed (mainnet merged with Beacon Chain, reducing energy consumption by 99.5%)
• April 2023 - Shanghai/Capella upgrade (enabling staking withdrawals)
• March 2024 - Dencun upgrade (Proto-Danksharding + multiple EIPs optimizations)
• TBD - Electra/Prague (future tech research like Verkle Trees)
• Ultimate goal - Full Danksharding (truly sharded network)

Dencun is a “core link” in this roadmap—summarizing previous work and paving the way for complete Danksharding in the future.

Upgrades also carry risks, what must you know

No upgrade is perfect. While Dencun offers great benefits, there are points to watch:

Technical risks - Introducing new mechanisms inevitably involves risks. Although testing has been thorough (Goerli in mid-January, Sepolia at the end of January, Holesky in early February), ongoing observation after mainnet launch is necessary

Compatibility issues - Some older contracts may need adaptation to new mechanisms, which could be a minor hassle during the transition

Market adaptation period - Fees won’t drop instantly; DeFi activity will also need time to ramp up. Gas fees may fluctuate in the short term

Adoption speed test - Whether it can truly unleash its potential depends on the rapid iteration of layer-2 and dApp ecosystems

When will full Danksharding happen?

Proto-Danksharding is like a “partial test”—first optimizing data availability layer, then gradually advancing to full network sharding. The complete Danksharding will split Ethereum into multiple independent “subnets,” each with its own validators and transaction processing capacity. It’s a long-term project, but Dencun has laid the foundation.

How should traders view this upgrade?

From a market perspective, the significance of Dencun lies in:

1. Fee reduction expectations are priced in - If you’re a frequent on-chain trader, costs will indeed decrease, directly impacting DeFi yield calculations
2. Layer-2 ecosystem will become more active - Cheaper transactions will attract more users, increasing the practical value of layer-2 tokens
3. Ethereum fundamentals are improving - Progress in scalability indicates healthy ecosystem tech evolution, which can boost long-term ETH outlook
4. Waiting for the “second wave” of actual applications - The real opportunity may come when new applications emerge, not just on upgrade day

Overall, the Dencun upgrade marks Ethereum’s shift from “congested and expensive” to “fast and cheap.” For traders and developers, this is not just a technical iteration but a key step in ecosystem evolution.