HTX Ventures: What changes have occurred in Ethereum one week after the Dencun upgrade?
The Dencun upgrade to Ethereum's Layer 2 has brought significant cost reductions, opening up vast possibilities.Author: OdailyNews
On March 13, 2024, the Ethereum network underwent the Dencun upgrade, marking an important milestone in its development. This upgrade has significantly reduced costs for Ethereum's Layer 2, opening up vast possibilities. In this report, HTX Ventures analyzes the impacts observed one week after the Ethereum upgrade, focusing on cost reductions, network performance improvements, and their profound effects on the entire Ethereum ecosystem.
As a stakeholder in Ethereum's growth, HTX Ventures is very pleased to see these new developments. The Dencun upgrade is fostering the formation of a more inclusive ecosystem and paving the way for more innovative and complex applications such as gaming, SocialFi, DeFi, and cross-chain interoperability.
HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the best and most promising teams worldwide. Currently, HTX Ventures has supported over 200 projects across multiple blockchain tracks, some of which have already been listed on Huobi HTX for trading.
As shown in the chart, up until the Dencun upgrade on March 13, 2024, the Ethereum market continued to be highly sought after. Source: Google Finance
Cost Reduction and Network Efficiency Improvement
EIP 4844 Integration
The Dencun upgrade introduced EIP 4844, aiming to address Ethereum's high fees and slow processing times by implementing data blobs. Although it is still being integrated into rollups due to technical difficulties, there have already been significant improvements in gas fees for Layer 2:
- Transaction fees have significantly decreased across various L2 platforms:
Changes in average transaction fees: Median decrease of 50% - 99% (as of March 14, Source: DuneAnalytics Dashboard)
Arbitrum: $0.39 -> $0.14
Base: $0.37 -> $0.03
Optimism: $0.32 -> $0.01
zksync: $0.19 -> $0.1
Zora: $0.2 -> $0.001
- The cost of publishing data on L2 has significantly decreased:
(as of March 14, Source: DuneAnalytics Dashboard)
Layer 2 has successfully reduced the cost of publishing data on Ethereum by 88% by shifting to data blobs, lowering expenses from as high as $400 per transaction to about $40.
- Mainnet Gas fees have not decreased: Currently, Ethereum Gas prices have not been significantly affected. However, with the continued adoption of the Blob API, a reduction in Ethereum Gas fees may be observed. The decrease in fees can be attributed to several factors, including the shift of rollup demand to blobs, which frees up capacity for Ethereum's execution layer, and the separation of Ethereum Gas fees from Blob fees.
Source: https://ycharts.com/indicators/ethereum_average_gas_price
Future Outlook and Danksharding
Danksharding, as a key part of Ethereum's upgrade path, promises to further enhance network capacity and performance. Planned improvements include increasing the number of data blobs per block and exploring advanced data availability (DA) solutions such as PeerDAS. Research on MEV resistance, Verkle trees, and network optimization is also ongoing, aimed at creating a more efficient and user-friendly Ethereum ecosystem.
HTX Ventures' Perspective
HTX Ventures, as a stakeholder in Ethereum's growth, is excited about these new developments. The Dencun upgrade's focus on cost reduction, scalability, security, and usability not only fosters a more inclusive ecosystem but also paves the way for more innovative and complex applications such as gaming, SocialFi, DeFi, and cross-chain interoperability.
Emerging Trends and Competitive Landscape
Due to the reduction in fees, application chains will return to Ethereum in the form of rollups, and the emergence of new L2 and L3 solutions will signify a major transformation within the Ethereum ecosystem.
Competition among L2 solutions is intensifying, emphasizing the importance for founding teams to focus on users and developers, building community, infrastructure, and comprehensive growth strategies (including business development, sales, and marketing strategies).
Others:
The emergence of Eigenlayer brings the ability to expand outreach to numerous protocols within the Ethereum ecosystem, introducing greater flexibility and diversity, ensuring the ecosystem becomes more agile and resilient, further enhancing the overall ecosystem's resilience and scalability.
The pending approval of ETH ETFs and the SEC's decision on Ethereum's classification will have a significant impact on the asset's exposure in traditional markets. HTX Ventures is closely monitoring developments related to this event.
Conclusion
HTX Ventures remains committed to supporting the development journey of Ethereum, providing comprehensive assistance to projects at the forefront of decentralized data innovation. By promoting the advancement of cutting-edge technologies, we aim to contribute to the long-term success and expansion of the Ethereum ecosystem. We believe that with technological advancements and the continuous efforts of the community, Ethereum will unlock more potential, bringing greater value and possibilities to users and developers.
