The Dencun upgrade, launched on March 13, 2024, is considered one of the most significant improvements to Ethereum’s network. The upgrade combined the Cancun upgrade on the execution layer and the Deneb upgrade on the consensus layer, implementing a total of nine Ethereum Improvement Proposals (EIPs). The primary goal was to enhance Ethereum’s scalability and reduce transaction costs for layer-2 networks.

According to YCharts data, the average gas fee on Ethereum has fallen from 72 gwei in 2024 to just 2.7 gwei as of March 12, 2025. NFT sales, which had averaged $145 in gas fees last year, now only cost around $0.65.

Significant Decline in ETH Price

Despite the major drop in gas fees, the price of Ethereum (ETH) has declined 53% over the past year. During the Dencun upgrade in March 2024, ETH was trading above $4,070. As of March 13, 2025, ETH is priced at $1,891, according to CoinGecko.

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Dominik Harz, co-founder of Build on Bitcoin (BOB), commented to Cointelegraph that Ethereum has “underperformed” recently. Harz noted, “Since Trump’s election, Monday’s price drop erased all DeFi TVL gains. Between Solana’s memecoin frenzy and Ethereum’s fractured few months, it’s clear the industry is searching for a new, more sustainable and secure frontier for DeFi.”

Pectra Upgrade Faces Issues During Testing

Ethereum’s next major upgrade, Pectra, was rolled out on its final testnet, Sepolia, on March 5. However, soon after deployment, the team encountered issues with error messages and empty blocks being mined. Ethereum developer Marius van der Wijden confirmed that a fix had been deployed, but an unknown user later triggered the same issue, causing further disruptions.

Harz stated that while these testnet issues may delay the mainnet launch, they are far from Ethereum’s biggest challenge. The Pectra upgrade is expected to double data space for layer-2s, lower costs, and increase execution capacity. However, Harz warned, “While that’s a step in the right direction, the reality is that Ethereum is quickly losing its position as the go-to chain for builders, and Pectra isn’t the fix-all solution to its deeper issues.”

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In an Aug. 22 article on X, Galaxy researcher Christine Kim noted that mid-March Ethereum Dencun upgrade implementation has resulted in more failed transactions on layer-2 networks. This result was not the anticipated result of the improvement meant to save costs.

Published on Aug. 21, Galaxy’s paper “150 Days After Dencun” highlighted the study, which showed that while the upgrade has greatly increased transaction activity, it has also caused increase in failure rates. Kim pointed out that the failures are mostly related to the increase in bot activity, perhaps driven by reduced fees on these networks.

Especially impacted have been Base, Arbitrum, and OP Mainnet. The research shows Base had failure rates as high as 21%, Arbitrum reached up to 15.4%, and OP Mainnet had rates up to 10.4%. High-activity addresses—especially those doing 100 or more daily transactions—made up a significant share of these failures.

With a maximum of 4% across all seen networks, less active addresses did, however, have considerably reduced failure rates.

Not only are Ethereum’s layer-2 networks having similar problems. Separate Coinbase reports on Aug. 13 revealed that Solana also suffers from a high number of transaction failures; 25% to 45% of non- Vote transaction fees are wasted on unsuccessful transactions.

Through EIP-4844, the March 13 Ethereum patch included data blobs—also known as proto-danksharding. Designed to ease load on the execution layer, this function provided temporary data storage space for roll-up data, but it has also had unanticipated results.

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Impact of Dencun Upgrade

Thus, starting from April 14, more than 112 thousand ETH have been added to the total supply, as reported by the Ethereum data dashboard ultrasound.money. The inflationary activity started soon after the Dencun upgrade on March 13, which brought nine Ethereum Improvement Proposals (EIPs), among which EIP-4844 was cited as one of the sources of the inflation.

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Blobs was incorporated through EIP-4844 whereby the transactional information is stored in a separate and temporary format in order to relieve the layer 2 networks for block data fees in Ethereum. This upgrade also entailed proto-danksharding which improved the availability of data on block space on the Ethereum mainnet. Although these changes drastically lowered the costs of the transactions on layer 2 solutions such as Arbitrum and Optimism, the burning at the mainnet level had reduced right after these changes took place.

ETH Supply Dynamics

However, it is necessary to note that the rate of inflation has increased in recent years, but the total amount of ETH in circulation has reduced immensely after The Merge. According to data from September 2022,  1.5 billion ETH has been burned while 1,36 billion ETH is minted to supply; thus, there is a net shrinkage of 345,000 ETH. This decrease stand at a little over $1,1 billion current prices fait since the shift to a proof-of-stake consensus mechanism.

The effects of the change on the fee for transactions and storage capacity of the data for every Dencun upgrade demonstrates the growing complexity of the Ethereum space. Thus, reviewing the role and significance of the platform as it grows further, the struggle between inflation and deflation will play a major role in determining the future economic environment.

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The activation of the upgrade, including the EIP-4844, occurred on the network at epoch 269568, around 10 am ET.

With the implementation of Dencun, Ethereum Layer 2 rollups can now utilize blobs instead of the traditional “calldata” method for posting transactions. This change offers a direct avenue for reducing fees and passing on these savings to end users.

Blobs represent a major enhancement to Ethereum’s infrastructure, aiming to improve data availability without disrupting the current framework. By doing so, they help decrease transaction costs on Layer 2 solutions such as Base, Optimism, Arbitrum One, zkSync, Starknet, and others. A dedicated fee market for blobs will strive to maintain low transaction costs for Layer 2 networks, even during periods of high network congestion.

While some Layer 2 chains are planning to integrate blobs immediately, others may take some time to adopt this new feature.

Additional Improvements Introduced by Dencun

In addition to EIP-4844, the Dencun upgrade brings eight other code updates to the Ethereum network.

One notable improvement is EIP-4788, which introduces an “enshrined oracle” to facilitate communication between Ethereum’s execution layer and consensus layer.

Another significant enhancement is EIP-1153, which focuses on “transient storage,” a critical feature necessary for the launch of Uniswap version 4 later this year.

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The Starknet Foundation is set to roll out optimizations alongside Ethereum’s Dencun upgrade, aimed at significantly reducing transaction fees on its Layer 2 network.

The initiative involves the release of Starknet version 0.13.1 today, aligning with EIP-4844 following the launch of Dencun on the mainnet tomorrow. This update will transition Starknet from utilizing the more expensive “calldata” method for data transactions to the cost-effective “blobs” transaction type, paving the way for substantial fee reductions.

Dubbed EIP-4844 or proto-danksharding, blob transactions are scheduled to be activated on the Ethereum mainnet during the Dencun upgrade at epoch 269568 tomorrow at 13:55 UTC.

Blobs will introduce an additional feature to the network, enhancing data availability without disrupting existing Ethereum infrastructure, thereby leading to cheaper transactions across Layer 2 rollups like Starknet.

Diego Oliva, CEO of the Starknet Foundation, emphasized the potential for Dencun to directly lower fees for users on Starknet, attributing this to the platform’s higher proportion of Data Availability costs where savings will be realized.

Optimizing the Prover (Starknet)

In addition to incorporating EIP-4844, the Starknet Foundation aims to enhance its shared prover (SHARP) infrastructure. STARK technology scales by generating a single proof for each block of transactions.

Rather than transmitting every block’s proof to Ethereum, SHARP aggregates numerous proofs and packs them into batches known as “trains.” Starting this week, the size of these trains will gradually increase, leading to a higher number of Starknet transactions jointly verified on Ethereum, as stated in a release.

In conclusion, Starknet‘s integration of EIP-4844 alongside improvements to its SHARP infrastructure marks a significant step towards enhancing cost efficiency on Ethereum’s Layer 2 network, promising reduced transaction fees and improved scalability for users.

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“Really looking forward to Verkle trees,” Buterin declared on social media platform X. These trees reportedly unlock multiple benefits for Ethereum, as he explained:

Verkle trees will enable stateless validator clients, allowing staking nodes to run with near-zero hard disk space and sync almost instantly – a huge improvement for solo stakers and user-facing light clients.

Beyond enabling stateless clients, Verkle trees offer significant storage savings, paving the way for new functionalities, according to Buterin’s blog:

Verkle trees are a data structure that can upgrade Ethereum nodes, allowing them to stop storing massive amounts of state data without compromising block validation.

This translates to better decentralization thanks to lower hardware requirements for nodes. Joining the network would also be much faster due to the improved syncing speed.

The Ethereum community on X seems enthusiastic about Verkle trees, with one user calling it a “game-changer” due to its potential for near-instant syncing and minimal storage needs.

However, Ethereum’s “Dencun upgrade” remains on hold. Developers delayed it in 2023 for further development and expect it to launch this year.

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