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The Dencun upgrade to Ethereum is anticipated to significantly reduce transaction fees on layer-2 networks and enhance the scalability of Ethereum as a whole. The cryptocurrency has garnered investor attention and witnessed an appreciation in value for Ethereum Layer 2 (L2) tokens due to the upgrade, which is projected to be released on Wednesday, March 13.
The value of Ethereum has increased by 132.5% since 2023. In the last twenty-four hours, this newly discovered interest has caused its price to fluctuate by 0.27%, and it is currently valued at $3,999.52.
Gnosis issued a statement recently confirming the activation of the Dencun upgrade on the Gnosis chain. The upgrade, commonly known as the Dencun hard fork, is a fusion of the Cancun and Deneb upgrades implemented on Ethereum’s execution and consensus layers, respectively. Following the two previous big upgrades—Merge and Shapella—in the past two years, Ethereum has released its newest major upgrade, Dencun.
There are nine distinct Ethereum Improvement Proposals (EIPs) in the Dencun hard fork. The second component, Deneb, is designed to improve the consensus layer, which regulates how network participants concur on the blockchain’s state. Cancun focuses on enhancing the management and processing of transactions at the execution layer, whereas Deneb, the subsequent component, endeavors to optimize the consensus layer.
The Dencun update provides ephemeral data blobs via EIP-4844, commonly referred to as proto-danksharding, and reduced layer-2 transaction fees. This is an essential procedure that will enhance the scalability of the settlement layer in Ether. It is recommended that users who wish to take advantage of this fee with a degree of security and decentralization conduct transactions on L2s instead of Ethereum.
Despite potential user inclination to transfer their assets elsewhere, high-value transactions conducted on Ethereum for application-specific purposes will continue to be the most favorable alternative as L2 platforms further enhance their capabilities.
An increasing number of investors are showing interest in the cryptocurrency space and are trying to acquire Layer 2 tokens, which are easily benefiting from the increased scalability brought about by the Dencun upgrade, thanks to the dramatic increase in the price of Ethereum and Bitcoin, which reached $71,993.30 as of March 12 at 21:15 PM.