Dencun upgrade and its impact on Ethereum killers
Ethereum is the first blockchain that enabled the creation of smart contracts and dApps which boosted its use. However, it is one of the first blockchains, and they are known for bottlenecks when the loads are high, low scalability levels, and high fees. So, during peaks, it was not so uncommon to pay a $50 fee on Ethereum for a single transaction.
This led to the development of plenty of so-called “Ethereum killers” - blockchains that offer the same functionality but try to solve the problems that Ethereum used to be facing.
Recently, Ethereum implemented a Dencun upgrade. This latest upgrade had to solve the issues that the network used to have, and it is believed that with it, Ethereum is going to move to the top and “kill’ its killers.
Let’s check what is this upgrade and what are its impacts on blockchain technology.
What is the Dencun upgrade?
The Dencun upgrade helped reduce Ethereum fees and alleviate network congestion by enabling Layer 2 solutions to handle some transactions off-chain and bundle them before sending them to the Ethereum mainnet. Only the most critical transactions are processed directly on the Ethereum blockchain. Additionally, ephemeral data blobs were introduced as storage units for intermediate results during transaction processing.
These approaches address the challenges of limited scalability and excessive transaction costs.
How did it work?
As soon as the upgrade was implemented, fees on Layer 2 solutions dropped instantly.
It means that the issue with high fees for L2 solutions is solved. Soon after the upgrade, the main L2 networks experienced drops of transaction fees
Along with it, this upgrade will allow the network to process around 100,000 transactions per second (TPS).
Earlier, Ethereum migrated to the PoS within the Merge upgrade that was implemented on September 15, 2022. The Merge allowed to reduce the energy consumption by the network by more than 99%.
How can it impact the main Ethereum competitors? Let’s see how the main data compares.
Solana
The Solana blockchain was introduced in 2017. This blockchain was backed by such major players at that time as Alameda Research and FTX. Among VCs that used to support the blockchain, Andreessen Horowitz was the most prominent. It is not surprising that with such resources, Solana surged rapidly to become one of the major Ethereum competitors.
Fees: approx. $$0.00025
TPS: 710,000
Compared to Ethereum, these numbers look impressive and it looks like Solana is going to keep its position despite the so-many complained about network outages.
Polkadot
Polkadot was founded by Peter Czaban and Gavin Wood, the co-founder of Ethereum who coined the now-ubiquitous term "Web3" in 2014. Wood published the white paper for Polkadot in 2016.
Fees: approx. $0.18
TPS: up to 1,000,000
Even though these data allow Polkadot to compete efficiently with Ethereum, we shall not forget that the tasks of these networks are different. Polkadot, even though also allows to develop dApps, is more focused on enabling interoperability among different blockchains. This is why it has its own use cases that do not coincide with Ethereum, and with the growth of Web3 adoption, the adoption of Polkadot will also be growing.
Cardano
Charles Hoskinson, an Ethereum co-founder who left the project due to disagreements over its direction, started developing Cardano in 2015 and launched the blockchain network with its first mined block in 2017. Cardano aims to become a platform for decentralized applications (dApps) with various use cases governed by stakers. Positioning itself as an updated alternative to Ethereum, Cardano refers to itself as a "third-generation" platform compared to Ethereum's "second-generation" status.
Fees: from 1,000 transactions per second, adjustable
TPS: approx. $0.48
Considering the scientific approach to all innovations on its blockchain, Cardano has all the chances to survive the Ethereum upgrades.
Bottom Line
In conclusion, the Dencun upgrade reinforces the position of Ethereum in the ecosystem and challenges its rivals to maintain their competitive edge. However, it is expected that the major blockchains will keep their positions.