The upgrade is the first step toward enabling the network’s rollup-centric roadmap
- The Dencun upgrade is scheduled for March 13.
- It is expected to result in lower fees for users of layer-2 networks.
- It allows Ethereum to act as a proper database for other blockchains.
The upcoming Dencun upgrade on the Ethereum blockchain, set for March 13, marks the initial phase in realizing its rollup-centric roadmap. Fidelity Digital Assets, in a research report, asserts that this enhancement will transform Ethereum into an efficient and cost-effective database for layer-2 blockchains. This progress positions Ethereum as a more suitable distributed database for other blockchains, potentially leading to near-zero transaction fees for layer-2 users and attracting a broader user base.
The upgrade is anticipated to facilitate the scalability required for supporting millions of users on layer-2 blockchains, significantly expanding Ethereum's total addressable market. By reducing costs for layer 2 blockchains to store data on the main blockchain, the improvement is expected to result in lower fees for users. Rollups, specialized Ethereum protocols processing transactions independently, enhance speed and reduce costs, while layer 2s, additional blockchains layered on top of the base layer, alleviate scaling and data bottlenecks.
Despite these advancements, the upgrade may not directly benefit Ethereum users, as the fee reductions are specific to layer 2 transactions and won't impact those on the base Ethereum blockchain. In the short term, users seeking fee advantages will need to compromise some decentralization and security by opting for layer-2 transactions. This choice could prompt more users to bridge assets elsewhere.
However, Fidelity Digital Assets maintains that, in the medium term, Ethereum remains the preferred option for application-specific purposes, even as layer-2 platforms continue to mature.