In hours, Ethereum will have an update that promises to reduce commissions

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The Ethereum network is going through decisive hours in terms of development. Shortly, on Wednesday, March 13 at 1:55 p.m. (UTC), it will have an important update to its protocol, which has been called Dencun. It comes with the promise of reducing the commissions paid for making transactions on Ethereum and its second layers.

After several postponements, Dencun was confirmed for the slot 8626176 on February 9, as reported by CriptoNoticias. The update is based on two key concepts: blobs and temporary data storage.

The first, blobs, consist of a more efficient form of information organization in Ethereum blocks. Blob It can be translated into Spanish as “mass” or “stain”, and that reflects reference to data sets that can be rearranged to make better use of all available space in each block. This optimization can increase the supply of space and, consequently, lower its cost for users.

On the other hand, Dencun introduces temporary data storage off-chain, that is, outside the chain. Although it would be available to the nodes at all times, this data would not take up unnecessary space in Ethereum’s accounting and, therefore, would reduce demand. Along with the previous point, this is a new downward momentum for commissions – which are paid in ETH – to transact on the network.

Ethereum Commissions.
The rise in activity on Ethereum boosted fees. Source: Ycharts.

Both technological advances are part of a reform called Proto-Danksharding by the Ethereum developers. As part of the improvement proposal or EIP 4844, Proto-Danksharding introduces several technical reforms related to the organization of data to make Ethereum and its second layer networks more efficient.

Minimal commissions on Ethereum second layers

Precisely the second layers or L2 of Ethereum will be the great beneficiaries of Dencun. According to data from IntoTheBlock, Token exchange fees on Arbitrum and Optimism – the most used – will be reduced by 80%. Thus, this type of operation could be carried out by paying between USD 0.3 and USD 0.4 in commissions; At the closing of this note, the values ​​for these operations exceed the dollar.

L2 Ethereum Commissions.
Fees for sending ETH (left) and exchanging tokens (right) on Ethereum and its second layers. Source: l2fees.

Commissions on mainnet will also improve for users, say the promoters of Dencun. In the last three months, rates increased by 44% (from 50 to 72 Gwei), possibly driven by a bull run that boosted activity on Ethereum and its supported networks.

In fact, at the time of writing this article, ETH is trading close to USD 4,000, a value not seen since 2021. While this may be related to a general bull market led by bitcoin (BTC), it also denotes the expectation for future events of its own. Ethereum, such as Dencun and the potential approval of exchange-traded funds (ETFs) in the United States during the month of May.

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