Layer 2 Blockchains Become Cheaper After Ethereum's Dencun Upgrade

The upgrade allows layer 2 solutions to store data in "blobs" instead of the expensive call data.

AccessTimeIconMar 14, 2024 at 9:32 a.m. UTC
  • The average transaction costs on layer solutions like Optimism and Base slide after Ethereum’s Dencun upgrade.
  • The upgrade allows layer 2 solutions to store data in “blobs” instead of the expensive call data.

Ethereum’s Dencun upgrade went live on Wednesday, introducing a mechanism to reduce costs associated with transactions on layer 2 solutions that batch and compress transactions before sending them to the mainnet.

The latest information shows the upgrade is living up to expectations.

According to blockchain analyst Marcov’s Dune-based tracker, the average cost of transactions on scaling solution Optimism has dropped to nearly 4 cents, down significantly from the recent average of around $1.4. The average fee on Coinbase’s layer 2 solution Base fell to 3 cents from roughly $1.50, while Arbitrum’s declined to 40 cents. The average fee on zkSync and Zora also fell.

Dencun upgrade introduced Binary Large Objects (blobs), which attach large data chunks to regular transactions. Blobs store data off-chain and become inaccessible after three weeks, unlike call data, which is stored permanently.

As such, layer 2 rollups like Optimism, Arbitrum, and zkSync can now store data in blobs instead of expensive call data, processing transactions at a lower cost. Rollups compute transactions outside the Ethereum main chain and then bundle multiple transactions into a single transaction before submission to the main chain.

Average transaction costs on layer 2 solutions. (Marcov/Dune)
Average transaction costs on layer 2 solutions. (Marcov/Dune) (Marcov/Dune)

Note that rollups need to implement blobs manually. So far, Base, Optimism, Arbitrum, Zora, and zkSync have done so, per Marcov. According to data tracking website L2Beat, there are more than 40 rollups on Ethereum, of which 26 are upcoming projects.

The consensus is that the blob mechanism will eventually lead to a 90% slide in transaction costs on layer 2 solutions. Per Vitalik Buterin, 125 kb of call data costs approximately 0.06 ETH ($238). Meanwhile, a similar-sized blob is likely to cost 0.001 ETH ($3.98), according to decentralized prediction platform Polymarket.

That said, the Dencun upgrade is yet to boost investor interest in the native tokens of rollups, which supposedly stand to benefit the most from the blob-carrying transactions.

As of writing, Optimism’s OP token traded 4.6% lower at $4.30, and Arbitrum’s ARB token changed hands at $2.07, down 6% on a 24-hour basis, according to CoinDesk data.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.