How Does the Ethereum Dencun Upgrade Affect Layer 2 and Gas Fees?

With the completion of the Ethereum Dencun upgrade, various Layer 2 solutions have also announced corresponding upgrades. What impact will the Dencun upgrade have, and what are its underlying principles？ The following text will provide a detailed explanation：

What is the Dencun Upgrade？ What are the Key Focus Areas？

The Dencun upgrade, essentially a combination of the Deneb and Cancun upgrades, targets both the consensus and execution layers. The Dencun upgrade incorporates nine EIPs (Ethereum Improvement Proposals), including:

• EIP-1153: Transient Storage Opcode

• EIP-4788: Beacon Block Root in EVM

• EIP-4844: Sharding Blob Transactions

• EIP-5656: MCOPY Opcode for Memory Copy

• EIP-6780: SELFDESTRUCT in the Same Transaction

• EIP-7044: Perpetually Valid Voluntary Exit Signatures

• EIP-7045: Maximum Gap for Proof Inclusion

• EIP-7514: Maximum Epoch Attrition Limit

• EIP-7516: BLOBBASEFEE Opcode

The spotlight of the Dencun upgrade is on EIP-4844. Also known as Proto-Danksharding, EIP-4844 serves as a precursor to the mainstream sharding approach in the Ethereum community, Danksharding. The primary objective of EIP-4844 (Proto-Danksharding) is to introduce a new transaction type called “Blob transactions” to Ethereum. These transactions add an additional temporary data space, called Blob, to the Ethereum mainnet specifically dedicated to processing Layer 2 related transactions, thereby significantly reducing the transaction cost of Layer 2.

Whether it's Optimistic Rollup or ZK Rollup, any Layer 2 that relies on the Ethereum mainnet as the data availability layer operates by synchronizing its transactions, proofs, and execution results into the calldata data space on the Ethereum mainnet to ensure decentralization and security. However, this reliance on calldata data synchronization has posed a significant challenge, as Layer 2 transactions compete with all other transactions on the Ethereum mainnet in the same fee market, leading to high transaction costs for Layer 2.

With the implementation of EIP-4844, Ethereum will add an additional Blob data space in blocks specifically for processing Layer 2 related transactions. Layer 2 will no longer need to write data to the calldata space, but instead utilize the Blob space for data synchronization. Additionally, post-implementation, Layer 2 related transactions will be separated into a distinct fee market from other Ethereum mainnet transactions, reducing interference between them.

How Will the Dencun Upgrade Affect L2 Fees and Ethereum Gas Fees？

Arbitrum's developer and Offchain Labs co-founder Steven Goldfeder believes that Dencun will unveil some very interesting developments that will help reduce L1 fees.

Starkware CEO Eli Ben-Sasson notes that blobs will be significantly reduced, but it depends on the price of the blobs being used.

Optimism has launched a website called welovetheblobs for intuitive queries on fee changes for various operations:

As shown in the above figure, for Layer 2 implementations using Optimism and Op Stack, the upgrade is expected to reduce fees by over 96%.

Todd, a partner at the well-known non-custodial Ethereum staking service provider Ebunker, emphasizes that the most important aspect of the Cancun upgrade is the substantial reduction of gas fees on L2, gaining an advantage in competing with other L1 platforms. Additionally, considering that the sequencers of L2 are also significant gas consumers on the Ethereum mainnet, a slight decrease in Ethereum mainnet gas fees can be expected after the upgrade.