Dencun Marks ‘Massive Moment’ for Ethereum: Arbitrum Co-Founder

Cheaper transactions could spark innovation and spur adoption

By: André Beganski

March 14, 2024

Ethereum’s Dencun upgrade isn’t just about reducing layer-2 transaction costs.

At its core, the upgrade also improves Ethereum’s accessibility, according to Offchain Labs co-founder Steven Goldfeder. That could pave the way for the greater adoption of crypto, he said, and unlock new possibilities for developers to build more data-intensive apps.

“This is a massive moment,” he said in a Thursday Coinage interview, describing Dencun as the first time “rollups have taken the main stage on Ethereum.”

Activated on Wednesday, Dencun enables networks built on top of Ethereum to better save on costs by establishing a spot for them to post bundled transactions to Ethereum’s network. Previously limited to using calldata, so-called “blobs” introduced by Dencun are billed as a designated alternative for layer-2s to cheaply leverage Ethereum’s security.

An upgrade for Arbitrum rolled out Thursday enables the network to support Dencun’s features. And while transaction costs on the layer-2 built by Offchain Labs have already started falling, they’re expected to come down further on Monday, Goldfeder said — explaining that Arbitrum’s so-called ArbOS Atlas upgrade is composed of two phases.

Goldfeder estimated that transaction costs on Arbitrum could fall by a factor of 10 from Friday to Monday, once Arbitrum’s upgrade is fully implemented. But he acknowledged that there’s “a lot of price parameters” at play, and it wasn’t totally clear how far costs could fall.

That being said, the cost savings for other layer-2s has been stark. On Thursday, Coinbase’s Jesse Pollak shared a screenshot of how Dencun has impacted transaction costs on Base, a layer-2 built by the exchange. Transaction fees on Base fell from $0.31 to $0.0005, he said on X, reducing friction on the network to just fractions of a penny.

“Reducing costs means so much more is possible onchain,” Goldfeder said. “Data costs have historically been the dominant part of fees for rollups, and reducing that means that you can do more onchain in the same space for cheaper.”

Even when it comes to existing applications on layer-2s, such as decentralized exchanges, Dencun’s features are beneficial, Goldfeder said. The underlying mechanisms are still the same — the application’s code hasn’t changed — but because of Dencun, it’s “changed the price point [at which] it makes sense” for people to engage.

Last month, Arbitrum announced a partnership with the stock and crypto trading platform Robinhood, bringing swaps on the layer-2 to users of Robinhood’s self-custodial wallet. Goldfeder said the partnership parallels Dencun’s impact in some ways — focusing on improving the accessibility and costs associated with onchain activity.

“Making Arbitrum trades accessible to Robinhood users is a massive unlock because there are so many people that want to participate but don't know how,” he said. “To really get the Robinhoods and institutional players of the world, we have to get our technology to them, not ask them to bend to us.”


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