March 19, 2024

Drastic Drop in Transaction Fees on Ethereum Layer 2 Networks Post Dencun Upgrade

Transaction fees on major layer 2 networks have seen a remarkable decline, ranging between 50% and 99%, following the implementation of Ethereum's highly anticipated Dencun upgrade.

The recent activation of Ethereum's Dencun upgrade on March 13 has swiftly translated into substantial scalability improvements for layer 2 networks supporting EIP-4844.

Data analysis reveals a remarkable downturn in average daily transaction fees across prominent Ethereum layer 2 networks such as Arbitrum, Optimism, Base, ZkSync Era, and Starknet. Over the past week alone, these fees have plummeted by 85%, 98%, 99%, 72%, and 98%, respectively.

Arbitrum, which only integrated support for EIP-4844 on March 13, has hinted at additional gas-reducing measures scheduled to go live this month.

The relatively higher fees observed on ZkSync Era can be attributed to its zero-knowledge (ZK) rollup architecture. Unlike optimistic rollups such as Optimism and Base, ZkSync Era does not impose a seven-day delay on mainnet withdrawals, offering notable performance benefits.

Although Starknet also operates on a ZK-rollup framework, the project has announced plans to implement further fee-saving measures concurrently with the Dencun upgrade. Starknet anticipates doubling the cost reduction achieved by EIP-4844 and intends to subsidize fees to their expected level upon completion of the roll-out.

The median price of swaps on Uniswap, a leading decentralized exchange, has seen a staggering 96% decrease from $1.19 to just $0.05 in the wake of the Dencun upgrade.

These developments underscore the significant success of the Dencun fork and its flagship enhancement, EIP-4844, colloquially known as proto-danksharding.

EIP-4844's replacement of gas-intensive calldata with binary large objects (blobs) on layer 2 has been instrumental in driving down transaction costs. Prior to the activation of Dencun, experts estimate that calldata accounted for a substantial portion, ranging between 73% and 90%, of layer 2 transaction expenses. In contrast, blobs offer a lightweight data format, facilitating a substantial reduction in fees.

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