Ethereum's Dencun Upgrade to Lower Fees for Layer-2 Network Users

According to CoinDesk, the Ethereum blockchain's Dencun upgrade, scheduled for March 13, is expected to result in lower fees for users of layer-2 networks. The upgrade will allow Ethereum to function as a proper database for other blockchains, enabling its rollup-centric roadmap. Fidelity Digital Assets mentioned in a research report that Ethereum's improvement as a database unveils the opportunity for near-zero transaction fees for users of layer-2 networks, which could attract more users. The Dencun upgrade will provide the scaling needed to support millions of users on layer-2 blockchains, making it a more fitting distributed database for other blockchains. The improvements are expected to bring substantially more users into the Ethereum ecosystem and expand the network's total addressable market (TAM). The upgrade will lower costs for layer-2 blockchains to store data on the main blockchain, and this reduction will likely be passed along to users in the form of lower fees. However, the upgrade will not have many direct positive effects for Ethereum users, as the fee reductions promised to layer-2 users will not affect those transacting on the base Ethereum blockchain. In the short term, users who wish to benefit from this fee change must sacrifice some decentralization and security by transacting on layer-2 networks instead of Ethereum. This will spur more users to bridge assets elsewhere. However, the report strongly believes that transacting on Ethereum for application-specific purposes will still be considered the best option in the medium term as layer-2 platforms continue to mature.