The upgrade of Dencun on the Ethereum mainnet, could it potentially fuel a new surge in ETH?

The Dencun upgrade was successfully implemented on the Ethereum mainnet at 13:55 UTC on March 13, marking a significant milestone for Ethereum's scalability efforts.

Dencun is expected to notably reduce transaction fees on layer-2 networks and enhance Ethereum's overall scalability. This upgrade, considered the most anticipated since the Merge, aims to address some of the network's longstanding scalability challenges.

Arthur Breitman Comments on Dencun's Limitations in Addressing Layer-2 Challenges

While Dencun represents a step forward, it doesn't address all the limitations of layer-2 solutions, according to Arthur Breitman, co-founder of Tezos. He suggests that while transaction costs may decrease, Ethereum's rollups remain constrained in throughput and often resort to centralization measures.

Dencun's deployment follows the Shanghai upgrade from last April, which enabled Ether unstaking post-Merge transition. Incorporating nine Ethereum Improvement Proposals (EIPs), Dencun combines enhancements to both the execution and consensus layers of the Ethereum network.

EIP-4844: Enhancing Ethereum's Scalability and Settlement Potential with Data Blobs

Among the key features of the upgrade is the introduction of data blobs via EIP-4844, aimed at improving data availability and reducing layer-2 transaction fees. This move is seen as crucial in establishing Ethereum as a scalable settlement layer.

Despite the promise of fee reductions, Ethereum mainnet users won't immediately benefit. To enjoy lower fees, users must transact on layer-2 solutions, sacrificing some decentralization and security. However, Ethereum remains the preferred option for high-value transactions due to its maturity and reliability.

High Gas Fees on Ethereum Mainnet Drive Users Toward Alternatives

Gas fees on the Ethereum mainnet remain high, prompting users to seek alternative solutions. With gas fees above 72 gwei, average swap transactions cost $86.15 in gas fees, while nonfungible token sales average $145.60, according to Etherscan data.

Ethereum average gas fee. Source:Ycharts

Ethereum’s more recent performance has also been positive and ETH is up 50.85% in the last 30 days, and the latest 24 hours of trading saw it, despite a massive whipsaw, stay in the green by 0.10%.