Golden Ethereum symbol surrounded by binary code

Key Takeaways:

The Coinbase Ethereum layer-2 network, Base, experienced a 350% increase in daily transactions to 2 million following the Dencun upgrade, largely due to a more than 60% reduction in transaction fees.
The Dencun upgrade, implementing Ethereum Improvement Proposal 4844, significantly cut layer-2 transaction fees by improving L2 data availability and reducing gas costs by up to 90% for certain networks.
Despite Base’s growth, Arbitrum and Optimism continue to dominate the layer-2 ecosystem, with a combined total value locked of $23 billion, while Base has emerged as the sixth-largest network with a $1.46 billion total value locked.

Following the remarkable Dencun upgrade, the Coinbase Ethereum layer-2 network, Base, experienced a staggering 350% increase in daily transactions, catapulting the figure to a historic 2 million on March 16.

This surge is primarily attributed to a significant decrease in transaction fees, which plummeted by over 60% post-upgrade.

In detail, Base’s transaction volume saw a monumental rise from an average of 440,000 per day to an astounding 2,064,920 on March 16, shortly after the Dencun upgrade was implemented.

Daily transactions analytics — Daily transactions reached 2M on Base. Source: Dune

This upgrade not only boosted the daily transaction volume but also attracted a record number of new users, with 666,866 joining the network on March 16 alone—a 3,200% leap from the average in the preceding days.

The Dencun upgrade introduced Ethereum Improvement Proposal 4844, drastically cutting layer-2 transaction fees by implementing data blobs or proto-danksharding. This innovation significantly improved L2 data availability, slashing gas costs by up to 90% for certain networks.

Post-upgrade, average transaction fees on leading layer-2 networks such as Arbitrum, Optimism, Base, zkSync, and Zora dropped between 60% and 90%, as indicated by Dune Analytics.

Layer 2 average transaction fees dropped between 60% and 90%. Source: Dune

The fee reduction following the Dencun upgrade has played a crucial role in this growth, with average transaction costs on Base decreasing by more than 60%, as reported by Blockscout.

Base average transaction fee — Average amount in ETH per transaction. Source: Blockscout

Launched in August by Coinbase, Base has quickly risen to become the sixth-largest network within the Ethereum layer-2 ecosystem, boasting a total value locked of $1.46 billion and holding a 4.1% market share of layer-2 solutions, as per L2beat.

Despite the impressive achievements of Base, Arbitrum and Optimism continue to lead the layer-2 ecosystem with a combined total value locked of $23 billion, commanding market shares of 42% and 23%, respectively.

Furthermore, the Dencun upgrade has led to substantially lower gas fees for token swaps on platforms like Uniswap’s Optimism deployment, with costs dipping to as low as $0.01, highlighted by protocol founder Hayden Adams.

Trading in Uniswap on Optimism now costs less than $0.01 in gas

Let’s fucking go, we’re scaling ethereum

Huge shoutout to everyone involved in shipping Dencun pic.twitter.com/CDmWEvS8LW
— hayden.eth 🦄 (@haydenzadams) March 14, 2024

As Ethereum’s layer-1 gas fees remain elevated, recently peaking with the asset’s value surpassing $4,000, the costs for Ether transfers, USD Coin transactions, and Uniswap swaps have adjusted to approximately $2.1, $5, and $16, respectively, according to Gasfees.io, marking a significant shift in the Ethereum transaction landscape following the Dencun upgrade.