Understanding the Importance of Fee Stabilization in the Crypto Industry

Ethereum’s Dencun Hard Fork: The Biggest Upgrade Since The Merge

The highly anticipated Dencun hard fork for Ethereum went live on the mainnet on March 13, bringing with it a host of improvements and changes.

While many were focused on the promised transaction fee reduction for layer-2 scaling networks, the true game-changing benefit of the upgrade is fee stabilization, according to Fuel Labs co-founder and CEO Nick Dodson in an exclusive interview with Cointelegraph:

“Although EIP-4844 has been touted for its fee reduction capabilities, its true impact lies in fee stabilization. This upgrade expands capacity and scalability, rather than solely lowering fees.”

Following the upgrade, several Ethereum L2s saw a significant decrease in median transaction fees, with some experiencing a reduction of up to 99%. This includes Starknet, Optimism, Base, and Zora OP mainnet.

The Dencun Upgrade: A Game-Changer for the Crypto Industry

The recent Dencun upgrade has brought about a significant reduction in fees for layer-2 networks, which is a major win for the crypto industry. However, according to Dodson, the true benefit lies in the network’s scalability and the stabilization of fees for future users. This will lead to even lower layer-2 fees with upcoming upgrades.

The Dencun hard fork, consisting of nine Ethereum Improvement Proposals (EIPs), has focused on improving transaction management and processing on the execution layer (Cancun) and enhancing the consensus layer (Deneb). This upgrade will greatly increase the network’s overall scalability and throughput, as stated by Dodson:

“The Ethereum network is now on a path to serve a larger number of users worldwide… This upgrade marks a significant step towards increasing throughput beyond just rollups. Finally, the layer-1 is expanding its capacity to support various types of rollups and executions.”

With this upgrade, Ethereum is poised to become a practical and meaningful solution for web 3.0 websites, differentiating it from the current web 2.0 landscape. The US government’s regulation of the crypto industry has been a hot topic, but with this upgrade, the industry may see more positive developments. Additionally, the merger of various crypto projects and the live feed of crypto prices will further shape the future of this rapidly evolving industry.

After the update, the value of Ether (ETH) dropped by 2.44% in the 24-hour period leading up to 11:30 am UTC, reaching a trading price of $3,956, as reported by CoinMarketCap.