Despite the growing competition among blockchains, the launch of the Dencun update will help Ethereum “mature” by reducing transaction fees and increasing the scalability of the network. This is stated in a report by Grayscale Research.
According to analysts, the protocol is ready to take advantage of the update, which, along with other factors, makes it more modular.
In 2023, the blockchain of the second largest cryptocurrency by capitalization showed lower performance compared to Solana and Avalanche, as it was in a “teenage phase,” according to Grayscale.
This phase was characterized by low transaction speeds and throughput with high costs for users. Dencun aims to solve these problems by expanding the modular structure of the network and reducing gas fees.
“While it is unclear exactly how much the upgrade will change transaction costs for L2 end users, some estimate a reduction of more than 20 times. If everything goes according to plan, Dencun will help reduce the gap between second-tier networks like Optimism and Arbitrum from solutions on Solana [in the context of commissions],” the experts emphasized.
At the same time, Grayscale admits that Ethereum is perhaps “the safest, most reliable, and also the largest platform for smart contracts by market capitalization.”
Analysts also noted the emergence of solutions like EigenLayer, which allow staking to be used as a security element in various chains.
In the future, Ethereum's security-as-a-service model could significantly improve the ecosystem by extending solutions to additional networks, including bridges or oracles, the report says.
According to researchers, in 2023 the number of ETH locked in staking increased by 83%, increasing the blockchain’s “security budget” to $82 billion.
However, analysts clarified that Ethereum needs to solve the problem of validator concentration in the Lido liquid staking protocol. The platform accounts for 35% of the total amount of ETH locked.
“We believe that the Ethereum ecosystem remains well positioned to strengthen its position as a leading blockchain protocol. […] Upon reaching maturity, the smart contract platform may cease to be a market where the winner takes all,” the company concluded.
Dencun is expected to launch on the mainnet on March 13th. One of the main components of the update is EIP-4844. It includes a Proto-Danksharding option for scaling.
Let us remind you that on February 7, the Ethereum team successfully implemented an update in the Holesky test network.
