See More

Ethereum Transaction Fees Will Drop 10X: Price Impact

2 mins
Updated by Bary Rahma
Join our Trading Community on Telegram

In Brief

  • Ethereum's Dencun upgrade is set to significantly improve blockchain efficiency and scalability, with a launch date of March 13.
  • Transaction fees on Ethereum's Layer 2 solutions are expected to decrease by at least 10 times, enhancing cost-effectiveness.
  • Analyst Wolf predicts a potential 500% bull run for Ethereum, pushing its price towards $14,000, following the Dencun upgrade.
  • promo

Ethereum’s much-anticipated Dencun upgrade is set to revolutionize the blockchain industry. Scheduled for March 13, this upgrade introduces a series of improvements to enhance efficiency and scalability across the board.

Central to the Dencun upgrade is implementing nine Ethereum Improvement Proposals (EIPs), with EIP-4844, or proto-danksharding, stealing the spotlight.

Ethereum Transaction Fees Will Drop Drastically

The innovative proto-danksharding proposal introduces blob-carrying transactions. This novel approach drastically reduces data storage on the consensus layer by storing data off-chain and referencing it through a hash. It simplifies transaction verification and significantly lowers the data storage footprint, as blobs are not permanent and become inaccessible after about three weeks.

The implications of these enhancements are profound, particularly for Ethereum’s Layer 2 (L2) solutions. Indeed, the upgrade is expected to slash transaction fees by at least 10 times. Subsequently, marking a seismic shift towards making Ethereum more scalable and cost-effective.

This fee reduction will decrease transaction costs to as low as $0.02. This is a stark contrast to the current average of $0.23. Such a development may accelerate the adoption of Ethereum’s roll-up roadmap. Indeed, lower costs will make L2 solutions far more attractive and competitive.

“This long-awaited upgrade is forecast to cut costs for Ethereum’s L2s by at least 10x, making Ethereum more scalable and efficient. By leveraging rollups and temporary blob storage, the developers aim to increase throughput and reduce fees for users,” Lucas Outumuro, Head of Research at IntoTheBlock, said.

Read more: A Beginner’s Guide to Layer-2 Scaling Solutions

Ethereum's Layer 2 Transaction Fees
Ethereum’s Layer 2 Transaction Fees. Source: IntoTheBlock

It is worth noting the L2 solutions sector showcases strategic divergence, as Arbitrum and Optimism adopt contrasting expansion approaches.

Arbitrum’s Orbit focuses on creating Layer 3 (L3) networks that leverage the existing liquidity and applications of its L2 ecosystem. On the other hand, Optimism’s strategy involves deploying multiple L2s in parallel to cater to a broader range of applications.

ETH Price Prediction: A New Uptrend Has Begun

As Ethereum embarks on a new chapter, it sets the stage for a transformative advancement. One that could redefine the future of blockchain technology and elevate its market valuation to new heights.

Crypto analyst “Wolf” noted the current bullish trends in Ethereum and how the upgrade’s potential signals a golden opportunity for investors.

“The chart for ETH is incredibly bullish. Ignoring the clear 18-month accumulation phase, reminiscent of previous cycles that have resulted in substantial gains, would be a missed opportunity of significant proportions,” Wolf said.

Read more: Ethereum (ETH) Price Prediction 2024/2025/2030

Ethereum (ETH) Price Projection
Ethereum (ETH) Price Projection. Source: CoinTrader

Drawing from Wolf’s insightful analysis, Ethereum appears poised for an explosive 500% bull run, potentially propelling its price toward an unprecedented $14,000. As the Dencun upgrade nears, anticipation mounts over Ethereum, becoming more accessible and affordable for users worldwide.

Top crypto platforms in the US | March 2024

Trusted

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

Frame-1934.png
Bary Rahma
Bary Rahman, a talented journalist, graduated from New York University with a degree in Journalism. Skilled in SEO, she has worked with CNN, showcasing her investigative skills and storytelling abilities. In addition to her journalistic accomplishments, Bary has contributed her expertise as a content writer for Binance, crafting insightful articles on the dynamic crypto industry. Her unique fusion of journalism and SEO makes her a versatile and highly respected figure in the industry.
READ FULL BIO
Sponsored
Sponsored