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Ethereum (CRYPTO: ETH) has achieved a significant milestone with the completion of a substantial software update, dubbed Dencun, aimed at reducing the cost of utilizing its Layer-2 solutions
What Happens: Networks such as Arbitrum (CRYPTO: ARB), Polygon (CRYPTO: MATIC) and Coinbase Global Inc.’s (NASDAQ:COIN) Base, which scale Ethereum, can now execute transactions that previously cost up to $1 for just a cent.
Moreover, transactions that were a few cents are now reduced to a fraction of a cent.
The Dencun update, named after combining "Deneb" and "Cancun," represents a groundbreaking shift in the Ethereum ecosystem, potentially transforming the end-user experience more than any other update before.
It is anticipated to catalyze the development of innovative applications and services that are free to use.
One of the key innovations introduced by Dencun is a new method for data storage.
Traditionally, most Layer-2 blockchains have stored data directly on Ethereum, a practice that due to the permanence of this data on every Ethereum node, contributed to approximately 90% of Layer-2s' operational costs.
Also Read: Ethereum ETF Approval Odds Plummet: '35% Isn't 0%, Still Possible'
These costs are often transferred to applications, which, in turn, charge the end-users.
The Dencun update introduces "blobs," a new type of data repository that significantly reduces costs by storing data for only about 18 days.
The adoption of blobs is expected to free up space on the Ethereum network, potentially alleviating congestion issues.
However, this means the network will no longer maintain a complete, permanent record of all transactions.
Despite this change, the update has been met with enthusiasm, as evidenced by a roughly 75% increase in the value of Ether, Ethereum's native cryptocurrency, this year.
Price Action: At the time of writing, Ethereum was trading at $3,990, up 2.7% over the past 24 hours, as reported by Benzinga Pro.
Image: Shutterstock
