The Dencun upgrade for Ethereum was activated on Wednesday, introducing a mechanism aimed at reducing transaction costs on layer 2 solutions. These solutions batch and compress transactions before sending them to the mainnet.
Recent data indicates that the upgrade is meeting expectations. According to blockchain analyst Marcov’s tracker based on Dune, the average transaction cost on scaling solution Optimism has plummeted to nearly 4 cents, a significant drop from the recent average of around $1.4. Similarly, the average fee on Coinbase’s layer 2 solution Base decreased to 3 cents from roughly $1.50, and Arbitrum’s fell to 40 cents. The average fees on zkSync and Zora also experienced declines.
The Dencun upgrade introduced Binary Large Objects (blobs), which attach large data chunks to regular transactions. Blobs store data off-chain and become inaccessible after three weeks, unlike call data, which is stored permanently.
As a result, layer 2 rollups like Optimism, Arbitrum, and zkSync can now utilize blobs instead of costly call data to process transactions at a lower cost. Rollups execute transactions outside the Ethereum main chain and bundle multiple transactions into a single transaction before submitting them to the main chain.
It’s worth noting that rollups must manually implement blobs. So far, Base, Optimism, Arbitrum, Zora, and zkSync have done so, according to Marcov. L2Beat, a data tracking website, reports there are over 40 rollups on Ethereum, with 26 upcoming projects.
The consensus is that the blob mechanism will eventually lead to a 90% reduction in transaction costs on layer 2 solutions. According to Vitalik Buterin, 125 kb of call data costs approximately 0.06 ETH ($238). In contrast, a similar-sized blob is estimated to cost 0.001 ETH ($3.98), as per the decentralized prediction platform Polymarket.
However, despite the potential benefits for the native tokens of rollups from blob-carrying transactions, the Dencun upgrade has not yet sparked increased investor interest.
As of the latest update, Optimism’s OP token was trading 4.6% lower at $4.30, while Arbitrum’s ARB token changed hands at $2.07, down 6% over a 24-hour period, according to CoinDesk data.
