Ethereum's Dencun Upgrade Countdown: Layer2 Enters the Era of Lower Fees
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Ethereum's Dencun Upgrade Countdown: Layer2 Enters the Era of Lower Fees
Less than 7 hours remain until this milestone upgrade.
Navigating Web3 tides with focused insightsAuthor: Jasmine
The Ethereum network is expected to officially deploy the Cancun upgrade (Dencun Upgrade) on the mainnet at 21:55 Beijing time on March 13. This marks a major upgrade nearly one year after Ethereum completed its Shanghai upgrade in April 2023.
The Shanghai upgrade enabled withdrawal of staked ETH and rewards for validators, while the core purpose of the Cancun upgrade is introducing data blobs via proto-danksharding—an Ethereum scalability solution—to reduce transaction fees for Rollup-based Layer 2 networks.
This means that after the Cancun upgrade, gas fees on Layer 2 networks such as Optimism and Arbitrum will significantly drop. Some developers estimate costs could fall by as much as 75%. Lower fees will directly benefit everyday users and DApp applications relying on these networks.
Nine Technical Improvements Deployed to Mainnet
Following the completion of the Cancun upgrade on the Ethereum mainnet, nine improvement proposals (EIPs) will enhance the network’s scalability, security, and user experience. According to official Ethereum sources, these nine proposals will be integrated into Ethereum’s consensus and execution layers based on their respective functions.
The nine EIPs included in the Cancun upgrade and their functions
Several of these EIPs directly impact user experience within the Ethereum ecosystem. For example, EIP-7044 allows validators locked in Capella to voluntarily sign off on exit requests.
Currently, validators must stake 32 ETH to ensure they properly process transactions and maintain network security. Validators who perform their duties correctly receive rewards; those who fail may lose part of their staked ETH due to penalties.
Users without 32 ETH can currently use third-party staking services like Lido to participate with smaller amounts of ETH. However, users cannot guarantee these third-party validators won’t misbehave—and if they do, ordinary users may suffer losses.
Now, EIP-7044 will allow both validators and ETH stakers to sign instructions within smart contracts to exit their positions, specifying when the exit should take place.
Aside from EIP-7044, the most anticipated proposal is EIP-4844—the centerpiece of the Cancun upgrade—which increases data storage capacity for Rollup-based Layer 2 networks, drastically reduces transaction fees, and lays the foundation for future upgrades using sharded data structures.
EIP-4844 introduces "proto-danksharding," an initial Layer 2 scaling solution and an intermediate step toward the full Danksharding roadmap. The Danksharding path aims to enable Ethereum Layer 2 solutions—especially Rollups—to offer cost-efficient transaction capabilities even during periods of mainnet congestion. As a key component of Ethereum's long-term scaling strategy, it will be implemented gradually over future upgrades.
The core mechanism behind proto-danksharding is the introduction of the "blob" data unit—a new type of sharded data designed as part of Ethereum’s transaction structure. Blobs are more flexible and efficient than current calldata used to store transaction data because they carry transaction data stored at the consensus layer and are automatically deleted after 1–3 months. This approach helps reduce storage costs, enabling Rollup transaction data to be submitted at lower cost, ultimately reducing gas fees for end users.
Layer 2 Network Fees Will Drop Significantly
In the short to medium term, Rollups may represent Ethereum’s only trustless, permissionless scaling solution. Due to high transaction fees on the Ethereum mainnet, the ecosystem urgently needs to transition toward Rollups.
Indeed, Rollup-based Layer 2 networks have already greatly reduced user transaction costs: transaction fees on Optimism and Arbitrum are typically about 3–8 times lower than those on the Ethereum mainnet, while ZK Rollups—with superior data compression—can achieve fees up to 100 times lower.
On March 12, Ethereum’s gas fee was 57 Gwei, equivalent to $4.80; meanwhile, Arbitrum’s gas fee was just 0.2 Gwei (~$0.017), and Optimism’s was nearly 0 Gwei (~$0.000089).
According to @msilb7, a user on Web3 data platform Dune, if calculated based on total daily gas expenditure across Ethereum and various Layer 2 networks, the mainnet currently spends as much as $198.82 per second on gas fees, compared to $3.23 on Optimism and $6.32 on Arbitrum.
On March 5, Ethereum mainnet gas fees spiked again, reaching an average of 98 Gwei—the highest level since early May 2023. Data from Ethereum explorers showed that the average user paid $87.45 in gas fees for a single transaction that day, while NFT trades averaged $147. In contrast, transaction fees on Optimism and Arbitrum remained consistently low, staying in the single digits per transaction.
Even so, these fees remain expensive for many users. The introduction of EIP-4844 in the Cancun upgrade aims to solve this issue. Currently, the largest cost component in Layer 2 transactions is "call data" fees, which account for over 80% of total Layer 2 transaction costs. The blob unit’s temporary data storage mechanism is especially beneficial for short-term transactions.
Estimates suggest that blob costs will fall below 0.001 ETH, and Rollup transaction fees will drop below $0.05. Developers at Offchain Labs predict that, assuming previous traffic levels, Layer 2 gas fees could immediately decrease by 75% following the Cancun upgrade.
Undoubtedly, this will encourage broader adoption of the Ethereum ecosystem by users and DApps, further fueling the growth and prosperity of Rollup platforms like Optimism and Arbitrum.
Binance data shows that as of 11:00 AM on March 13, ETH was trading around $4,020. Earlier that morning, impacted by short-term BTC selling pressure, ETH hit a 24-hour low of $3,828. Optimism’s governance token OP traded at $4.42, closely tracking ETH’s movement, with a 24-hour low of $4.11. Arbitrum’s governance token ARB was priced at $2.06, down to a 24-hour low of $1.90.
Notably, ARB is set to see a large volume of tokens unlocked shortly after the Cancun upgrade. Data from digital asset tracker Token Unlocks indicates that Arbitrum will release approximately 1.111 billion ARB on March 16—about 76% of the current circulating supply. At the time of writing, this batch of unlockable ARB is worth $2.266 billion.
Specifically, 673.5 million ARB will be unlocked for the Arbitrum team and advisors—worth approximately $1.38 billion at current prices—while another 438.2 million ARB allocated to early investors will also be released, valued at around $902 million.
Crypto analysts warn that this unlocking event represents a substantial portion of ARB’s circulating supply. Per Arbitrum’s rules, no ARB will be released prior to the designated date—instead, all tokens will enter the market simultaneously on the specified release day. Holders should be mindful of potential ARB price volatility.
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