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As the Ethereum network prepares for the highly anticipated #Dencun upgrade, financial institutions must grasp the nuances of this pivotal event to navigate the evolving landscape of #DigitalAssets effectively. In this post, we delve into the basics of the Dencun upgrade, its impact, and the potential #risks involved. #Ethereum upgrades, like Dencun, typically occur through a process known as a hard fork. This involves implementing changes to the protocol that are not backward-compatible, necessitating a network-wide consensus among participants to adopt the new rules. Dencun is scheduled for March 13, 2024, at 13:55 UTC. As part of this upgrade, several Ethereum Improvement Proposals (#EIPs) will be implemented, including EIP-4844, EIP-4788 and EIP-1153 among others. One of the most important EIPs in the Dencun upgrade is #EIP4844: Shard Blob Transactions. This EIP is a pivotal step in Ethereum's journey towards scalability, and introduces a new concept of blob-carrying transactions. These transactions pave the way for more cost-effective data posting on Ethereum's mainnet, particularly benefiting Layer 2 networks (#L2s) such as #Optimism, #Arbitrum and #zkSync. L2s effectively take care of the processing of transactions in dedicated servers away from Ethereum L1 but are still required to post their data on Ethereum for data availability purposes. As a brief primer, L2s have been using existing methods to post data onto Ethereum which were not fit for the purpose. Blobs are essentially a new type of data structure accompanying Ethereum blocks for which users will still have to pay gas but using a separate fee market than that of the standard transaction execution. This separation along with the ephemeral nature of blobs (expire after 18 days) is expected to bring down transaction fees primarily for L2s but also standard L1 transactions (e.g., for ETH transfers) as they will no longer compete with each other. Of course, this is what the community expects to happen in theory but keep your eyes peeled for these fee trends using our brand new Gas & Fee Markets dashboard: https://lnkd.in/g4FqFjKx Regardless of the impact of EIP-4844, Dencun is a hard fork encompassing a set of other protocol changes with potential compound risks. What is more, failure of nodes to update their clients before Dencun is activated could trigger a fork, resulting in two chains. At Metrika, we diligently track the percentage of node client updates to monitor such risks. Additionally, monitoring of #KeyRiskIndicators (KRIs) like Block Proposal Rate, Attestation Rate, and Finalization Distance during the upgrade ensures a smooth transition Network Upgrade Performance Dashboard: https://lnkd.in/gFHvZMbX Institutions engaging with #DigitalAssets must acknowledge the dynamic nature of #blockchains, necessitating constant vigilance to manage risks effectively.

Make Ethereum cheap again: ‘Blobs’ to be launched via Dencun upgrade on March 13 Blob-carrying transactions are like normal transactions except that they carry an extra piece of data — the intended effect: more block space and cheaper transactions. https://lnkd.in/eu2QB6gs .

Why #Ethereum May Not Cross $5K This Cycle 🚫💰 👇 Disclaimer: This is my opinion and focuses on price action expectations, not fundamental issues with #Ethereum’s technology. Ethereum still remains a blue-chip asset. Though it started off pitching itself as the global world computer, but now seems to be evolving into more of a decentralized global consensus. High Staking Rates & Inflation: Ethereum has seen record staking levels since transitioning to Proof of Stake (#PoS), with over 33.9 million ETH, valued at $111 billion, locked in staking contracts. However, the network has become inflationary in recent months, with new issuance outpacing ETH burning. Staking rewards have also fallen compared to last July 📉. Dencun Upgrade & DA Layer: Low gas prices suggest reduced on-chain activity, indicating ETH is increasingly used as a data availability layer for Layer 2s (#L2s) rather than as a compute network. The March 2024 Dencun upgrade introduced “proto-danksharding,” cutting data storage costs for L2s like #Arbitrum, #Optimism, and #Polygon. This shift has resulted in L2s handling 85% of transactions, leaving the mainnet with just 15% 🔄. The Consensus Layer is now more active, driven by L2s submitting state roots to Ethereum, while the Execution Layer sees less direct transaction processing. Layer 2 Shift & Mainnet Impact: Ethereum’s mainnet transaction volume peaked in January and has since declined. Nearly 80% of #Uniswap transactions are now on the #Base network, an Ethereum L2 solution. This migration to L2s reduces demand for ETH on the mainnet, potentially pressuring its price 📉. TL;DR 📝 • ETH Inflation Risk: Layer 2 scaling dominates transaction activity, and with Ethereum’s mainnet usage decreasing, ETH may stay inflationary, affecting its long-term price 📉. • Dencun’s Impact: The Dencun upgrade furthers Ethereum’s role as a data availability layer, shifting focus away from being a compute network 🔄. • ETH as a “Beta” Asset: ETH is increasingly a “beta” play, while “alpha” opportunities arise in Layer 2 solutions and projects built on Ethereum 📈. • Potential Risks to ETH’s Role: If L2s find Ethereum too costly for state submissions or develop their own solutions, they might turn to alternatives like #Celestia, diminishing Ethereum’s role as a base layer ⚠️. • Optimism from Vitalik: Cross-L2 interoperability, as highlighted by #Vitalik on August 5th, could grow Ethereum’s ecosystem rapidly. However, much like how smartphone efficiency has improved without a leap in battery size, Ethereum’s ecosystem might expand without directly impacting ETH’s price. As L2s grow, ETH mainnet transactions could rise with more frequent state updates and interactions with L1. So, are you still team Modular L1, or are you siding with the Monolith vision, such as #Solana? 🤔 Let’s discuss! 🤓

Combined, the top Ethereum L2s now have: - 5x the number of active users than ETH L1 - 6x the number of transactions - 2x the number of devs However, Ethereum L1 is still doing 10x the combined fees at the L2 level. So, in the short run, L2 tokens could be seen as cannibalizing ETH. But ultimately, the road map points to more value accrual to ETH. Here's why: 1. L2s are fighting tooth and nail with each other. This is driving innovation. 2. More innovation brings in more app developers. 3. More apps = more users & more utility for ETH. 4. More utility for ETH = more demand for ETH. In summary, the scaling roadmap is set up for success because L2s drive innovation while sending value back to ETH holders. I view ETH as an index fund that captures the value of all of this competition at the L2 level. And I find it hard to justify buying L2 tokens for this reason. What do you think? Would love to hear a contrarian take on this. Data: Ethereum L1 fees vs Combined L2s powered by Token Terminal

⚡ Transactions fast enough to power a city? The Ethereum network is set to undergo the Dencun Upgrade tomorrow! With EIP 4844 expect lower fees & higher throughput. 🔗 Learn more about Ethereum's latest upgrade: https://lnkd.in/g_-aqqFt #Ethereum #DencunUpgrade

A new post is available on news.nbtc.finance : As Ethereum’s Dencun upgrade nears, here is all you need to know Discover how Ethereum’s Dencun upgrade could enhance security and reduce transaction fees. The Ethereum (ETH) network is set to receive a major update named “Dencun,” a blend of two smaller upgrades, Cancun and Deneb. The upgrade is expected to significantly reduce layer 2 (L2) transaction fees and enhance Ethereum’s scalability, efficiency, and security. The Ethereum [...] ➡️ Read more : https://lnkd.in/e4V9CeVb The Ethereum (ETH) network is set to go through a major update, named "Dencun", which combines two smaller upgrades, Cancun and Deneb. Scheduled for March 13, the update is expected to greatly decrease layer 2 (L2) transaction fees and enhance Ethereum’s scalability, efficiency, and security. The upgrade will introduce techniques for more efficient data management and smarter contract security, whist improving user-experience with staking ETH. It will also introduce features such as proto-danksharding and EIP-4788, which will improve connective ability between Ethereum's execution and consensus layers.

Figment’s average Staking Rewards Rate (SRR) on Ethereum throughout Q1 was 3.9% Our Q1 Ethereum validator report details Figment’s performance on consensus layer rewards, execution layer rewards, participation, and slashing. The report also takes a look into EigenLayer cumulative deposits so far.  View the full report here: https://lnkd.in/eRzpz9YA

2024 will be a groundbreaking year for Ethereum! Want a sneak peek at the revolutionary changes ahead? I'm thrilled to share my thoughts on Ethereum Improvement Proposals (EIPs) for 2024 ... 👇 - ⛽ EIP4844 is set to be a game-changer, potentially reducing rollups gas fees by up to 100 times. - 🚀 EIP4337 is another area that we're tackling at suku.world, moving towards gasless transactions and secure social logins - a complete overhaul of the Ethereum user experience! - 🧩 EIP6900: An extension of ERC-4337, further enhancing account abstraction with innovative features like gasless transactions and secure social logins. - 💾 EIP1153: Introduces Transient Storage OpCodes, a mechanism to optimize gas usage by enabling temporary state changes during transaction execution, ultimately making smart contract interactions more efficient. Curious about what else is in store for 2024? For more details, check out the full article: https://lnkd.in/efn-JxsH

Figment’s average Staking Rewards Rate (SRR) on ethereum throughout Q1 was 3.9% Our Q1 Ethereum validator report details Figment’s performance on consensus layer rewards, execution layer rewards, participation, and slashing. The report also takes a look into EigenLayer cumulative deposits so far.  View the full report here:  https://lnkd.in/eUmqi8qi

💙 What would happen if Ethereum never adopted L2 rollups? 🛠️ Our recent study, highlighted in Tenderly's 2023 EVM Network Landscape Report, examines a hypothetical scenario: What would happen if Ethereum had never adopted L2 rollups? In today's discussion, we will delve into the analysis of transaction counts, processing times, and global averages: 💙 Transaction count: In 2023, at their highest point, L2 rollups contributed over 80K transactions to the total transaction count of Ethereum. 💙 Processing times: L2 rollups effectively avoided transaction delays, preventing increases that could have reached up to 2.5 minutes, or more than 150%, during the highest peak. 💙 Global averages: Between 2021 and 2023, L2 rollups added an average of around 13,000 transactions, contributing slightly more than 1% to the total transaction volume. Although this increment appears minor, rollups were instrumental in averting an average gas price surge of 50 gwei, which is more than a 100% increase. They also helped prevent transaction costs from escalating by $9.83 (an 86% rise), and kept wait times from increasing by about 24 seconds, which is just over 25%. This study highlights the crucial impact of L2 rollups in boosting Ethereum's efficiency and scalability. Explore the full report and interactive chart spanning the years 2021-2023 👇 https://bit.ly/3OOeemO