Ethereum’s upcoming major upgrade, “Dencun,” is set to launch on March 13, promising an immediate 75% reduction in gas fees on layer 2s, thanks to the innovative proto-danksharding feature known as “blobs.”
Proto-danksharding, or blobs, involves directing some data from Ethereum’s layer 2s into temporary storage units called blobs for up to one month. This process helps alleviate the burden on validators, making transactions cheaper and faster.
According to David Silverman, Vice President of Product at Polygon Labs, gas fees could potentially decrease to a point where crypto companies and projects are willing to cover them, leading to a significant improvement in user experience.
With Dencun’s implementation, a large portion of Ethereum’s retail users are expected to transition to layer 2 solutions due to the allure of lower fees.
Terence Tsao, a developer at Offchain Labs working on Arbitrum, views Dencun as a transformative shift, indicating Ethereum’s mainnet may recede into the background while continuing to support the layer 2 network.
Furthermore, discussions around the approval of spot Ethereum ETFs are gaining traction, with analysts suggesting that regulatory clarity on Ethereum’s classification as a security could impact the approval process. Prometheum’s recent announcement of launching Ether custody services may prompt the SEC to provide clearer guidance on Ethereum’s regulatory status, potentially influencing the approval of Ethereum ETFs.
Overall, Dencun’s rollout and the evolving regulatory landscape surrounding Ethereum ETFs are significant developments that could shape Ethereum’s trajectory in 2024.