The Ethereum Dencun upgrade is scheduled for March 13, and discussions about how it will affect L2s and gas fees have been heating up. The Dencun upgrade is expected to reshape the outlook of the Ethereum blockchain, with developers anticipating this upgrade as a significant milestone, especially for Ethereum L2 networks. The main highlight of the Dencun upgrade is EIP-4844, also known as "proto-danksharding," which will introduce a new type of transaction category that reduces the cost of rollup transactions by introducing data blobs. These blobs are stored separately within transactions, allowing rollup networks or other protocols to temporarily store data on them. As a result, the cost for these L2 networks to store data on Ethereum will be significantly reduced, and this cost reduction will be passed on to users. So, how exactly will the Dencun upgrade affect L2s? 
How will the Dencun upgrade affect L2s?
Arbitrum: Offchain Labs is the developer behind the L2 (optimistic rollup) network Arbitrum. Offchain Labs co-founder Steven Goldfeder believes that Dencun will reveal some very interesting things and will help reduce L1 fees. Since some operations use a lot of data on L1 but almost none on L2, while others mainly use a large amount of L2 data, each ecosystem will decide for itself how to price and manage data on L1 and L2. Some competitors have set L2 fees to be free, but this behavior is difficult to sustain. StarkWare: Starkware is the main developer behind the L2 network Starknet, and the team has been preparing Starknet's infrastructure for the launch of proto-danksharding. Starkware CEO Eli Ben-Sasson believes that blobs will be greatly reduced, but this depends on the price of the blobs being used. This means that if this data is now added to blobs and assuming the price is 10 times lower, the cost will also drop by 90%. Base: Coinbase Protocol Lead and L2 Base creator Jesse Pollak estimates that the blob space opened up by proto-danksharding is about four times that currently used by Ethereum rollups. At this level of demand, transactions will become very cheap because the rate is market-based; if usage does not increase, costs could drop by 90% to 95%. However, low costs may lead to increased usage, and as demand rises, it will reach a stable equilibrium, with fees ultimately possibly 2 to 5 times lower than now. A 2x reduction would mean each transaction costs about 10-15 cents, while a 5x reduction would bring transaction costs below 5 cents. Polygon: Polygon co-founder Jordi Baylina stated at the ETHDenver conference that fees will decrease, mainly due to supply and demand; increased supply makes Ethereum's data availability greater, but it is difficult to predict exactly how much fees will drop. Another Polygon co-founder, Brendan Farmer, added that ZKrollups and optimistic rollups are different: optimistic rollups must pay for data that exists during a 7-day delay, but for ZKrollups, this cost is very low.
What impact will the upgrade have on gas fees?
According to OP Labs CEO Karl Floersch and other experts, the Dencun upgrade marks the dawn of a new era for Ethereum. This upgrade is seen as a key step in enhancing user experience and scalability, and the implementation of Dencun is expected to address long-standing issues, especially those surrounding gas fees and scalability. L2 developers predict that the Dencun upgrade will significantly reduce gas fees, making transactions on scaling networks cheaper and easier to verify. Polygon Labs VP of Product David Silverman believes that once settlement contracts are updated across all L2 networks, users can expect to save a significant amount on gas fees. Polygon Labs aims to ensure its users benefit from these cost reductions. According to Offchain Labs developer Terence Tsao, assuming current network traffic levels, gas fees on L2 networks could immediately drop by 75% after the Dencun upgrade is implemented. This is attributed to the introduction of "blobs" and proto-danksharding, which provide a more cost-effective data storage method for Ethereum. Proto-danksharding will allow L2 data to be temporarily stored for about a month, greatly reducing storage costs while maintaining security. This enhancement is compared to expanding Ethereum into a four-lane highway, with the potential for further expansion in the future. 0xTodd, a partner at the well-known non-custodial Ethereum staking service provider Ebunker, stated that the most important aspect of the Cancun upgrade is the significant reduction in L2 gas fees, giving it a competitive edge over other competing L1s. At the same time, considering that L2 sequencers are also major consumers of GAS on the Ethereum mainnet, after the upgrade is completed, a slight reduction in gas on the Ethereum mainnet can also be expected.
Transforming transaction efficiency and costs
The anticipated drop in gas fees could have far-reaching effects, and in the future, users may not even need to bear gas fees. Polygon Labs VP of Product Silverman envisions an abstract gas fee scenario, similar to how Web2 giants attract users by covering the costs of services like video conferencing and email. Although the vision of no gas fees mainly exists on L2 networks, the Ethereum mainnet will continue to play a crucial role in ensuring data security and facilitating communication between networks. However, it is expected that most on-chain transactions, including NFT purchases and other retail activities, will permanently migrate to L2 networks. Offchain Labs developer Terence Tsao believes that the Dencun upgrade will fundamentally change the way users interact with Ethereum, with the mainnet gradually moving to the background. This shift will eliminate the high costs associated with on-chain transactions, making activities such as NFTs more accessible and affordable for users. OP Labs CEO Karl Floersch expects that by removing barriers to integrating on-chain elements, cross-chain development can flourish across various media and platforms. For example, he envisions video games that generate NFTs interacting with DeFi protocols and seamlessly leveraging social media presence at minimal cost.
The upgrade will make Ethereum more rollup-centric
The Dencun upgrade also represents Ethereum's shift toward an L2-centric scaling approach, as Ethereum seeks to slow changes to its core components and focus innovation and user-level features on L2s. Unlike the base chain responsible for scaling, rollups are likely to be the trend of the future. Major rollup players have even begun coordinating with each other at L2 conferences, discussing and proposing improvements.
Changes to the EVM will not be brought to the Ethereum mainnet, such as new forms of account abstraction, precompiles, Opcodes, etc. With the implementation of EIP-4844, the ecosystem will begin to see the real impact of proto-danksharding. In addition, it is worth noting that as more L2s join the blob space, the impact of cost reduction will gradually diminish.
Summary
As the Dencun upgrade will significantly reduce gas fees and improve related functionalities, Ethereum is poised to usher in a new era of scalable and low-cost on-chain transactions. The upgrade will further drive innovation and a surge in adoption of L2 networks, fundamentally changing the way users interact with the Ethereum ecosystem.
