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... Robinhood announced the beta launch of Robinhood Wallet, a standalone app on the Apple Store that allows users to trade and swap cryptos with no network fees.
According to Robinhood its wallet is a self-custody, Web3 wallet that will initially support the Polygon network as its first blockchain, with plans to add support for additional networks in the future. ...
Canada-based asset manager Fidelity Investments has signaled that its institutional clients will be able to access Ether (ETH) custody and trading services beginning later this month, according to an email sent to customers.
Access to Ether services will be managed through the firm's crypto wing, Fidelity Digital Assets, which will give institutional investors the ability to purchase and hold the second-ranked crypto starting October 28.
According to the note from Fidelity, investors will be able to buy, sell and transfer Ether “using the same model provided for bitcoin investments today.”
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The move suggests that Fidelity is anticipating that Ether will ultimately be considered a commodity by regulators in the U.S. when it's all said and done. ...
Sberbank, the largest bank in Russia, announced this week that it has added new features to its open blockchain platform during a corporate blockchain industry event hosted by Sber Blockchain Laboratory.
The updated Sberbank platform will be technologically compatible with Ethereum, the world's largest decentralized finance (DeFi) ecosystem, which will enable developers to freely transfer smart contracts and entire projects between the bank's blockchain network and open blockchain networks.
The new platform will also be able to integrate with MetaMask, one of the most popular cryptocurrency wallets, enabling users to use an existing wallet to perform transactions with tokens and smart contracts hosted on the platform.
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November has been a busy month for crypto in Russia. On Nov. 24, local media reported that Russia’s State Duma started work on a draft amendment to the Digital Financial Assets law in order to create a national cryptocurrency exchange, with lawmakers and market participants meeting to discuss what changes would be required.
On Nov. 7, Russia's Central Bank opened public consultations on stablecoins, NFTs and other tokenized financial instruments, signaling renewed openness to the growth of crypto in the country.
But just three days later, Russia’s Central Bank (CBR) Governor Elvira Nabiullina reiterated her hardline stance on cryptocurrencies in the country.
“Regarding crypto, we are in favor of the development of digital financial assets, and the digitalization of finance,” Nabiullina said. “But digital financial assets are not limited to crypto, to private cryptocurrencies. We have not changed our position that private cryptocurrencies - for which it is not clear who is responsible, or how responsible, which are opaque and carry high risks of volatility - should not be used in settlements.”
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... the Ethereum Shanghai update scheduled to be implemented sometime in March, ...
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The main goal of the Shanghai update is to enable staking withdrawals, which have been disabled since the launch of the beacon chain in Dec. 2020.
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During the 99th Consensus Layer (CL) call on Dec. 1, Ethereum developers decided that they intended to roll out Ethereum staking withdrawals with the upcoming Shanghai hard fork due to the fact that some stakers have had their tokens locked for two years. At that time, the upgrade also included the implementation of "EVM Object Format" (EOF), which is a collection of Ethereum Improvement Proposals (EIP) designed to upgrade the Ethereum Virtual Machine (EVM) and make future upgrades easier.
On Jan. 6, developers held another call where they agreed to exclude the planned implementation of EOF from the Shanghai upgrade over concerns that its complexity would delay the implementation of withdrawals.
At the time of writing, data from Beaconcha.in shows that there are 16,149,561 Ether worth approximately $26.19 billion deposited into the Ethereum staking contract and currently unable to be withdrawn. According to Wennerge.com, the Shanghai upgrade will take place on March 31.
Tomorrow’s Shanghai and Capella upgrades to the Ethereum network, known collectively as ‘Shapella’, could have a major impact on the price of ETH in the near term, and will have major implications for the growth of the Ethereum ecosystem going forward.
Scheduled for around 10:30 pm UTC on April 12, ...
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Some have predicted a massive short-term selloff in the wake of the upgrade as billions of dollars' worth of ETH becomes unstaked and tradeable in a very short time. Zhao said he doesn’t expect a big price dump for ETH, because many of those who withdraw will restake with larger positions, while new market participants will be enticed to begin staking for the first time.
“I’ve talked to clients who said, ‘the reason we haven't staked all of the ETH is because right now I don't know when I can withdraw, I don't want to lock up all my assets.’ But they said after the Shanghai upgrade, they will feel more comfortable to commit most of their ETH assets, because they know they can withdraw any time they want,” he said. “So I think we will see more people stake. Yes, of course we will see people trying to withdraw, maybe selling some ETH, but we'll also see more people trying to join ETH staking, especially from the institution side, because it's just a little bit more certainty on their side.”
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Shapella also opens staking up to completely new profiles, including investors who are less wealthy, have shorter timeframes, or just want to start smaller.
“That's what we have been observing,” Zhao said. “I think we will see new people coming in, the reason being, there is liquidity staking, there are other services available in the market right now, where you don't have to commit 32 ETH in one go. You can commit one, two, so smaller customers can join as well.”
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Now that staking, an integral part of ensuring the security of the blockchain, will be complete, here’s what experts say Ethereum observers can expect in the coming months and years on the second-largest blockchain.
EIP-4844, proto-danksharding and ‘blobs’
Sharding, a concept aimed at increasing Ethereum’s scalability through more-efficient data storage, is starting to make its way toward reality.
Originally drawn from computer science, sharding splits the blockchain into smaller pieces, known as “shards,” in essence creating multiple mini-blockchains. Think of it like adding lanes to a highway: More cars have space to maneuver so there’s less congestion. On Ethereum, splitting the network into shards can allow for more space to process transactions and therefore lower "gas," or fee rates.
Danksharding does the same thing, but instead of using the shards to increase the number of transactions on Ethereum, it does so to increase space for groups of data, or “blobs,” allowing more data to be processed (which will be especially helpful for lowering transactions costs for layer 2 companion chains).
EIP-4844, or proto-danksharding, is the first prototype for danksharding, expected to hit Ethereum’s mainnet sometime in the third quarter of this year.
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The Verge, the Purge, the Scourge
In November, Vitalik Buterin, co-founder of Ethereum, released an updated road map, a set of issues to be tackled.
After EIP-4844 comes what’s known as the “Verge,” where Verkle trees will be introduced, another move to increase scalability.
Verkle trees will allow developers to store large amounts of data, and users only need to show a single piece, or a short proof, of that data to verify they have a root of that tree. Verkle trees will make data proofs much more efficient, though this is still a new concept in cryptography and not yet widely used.
The “Purge” will purge the spare, or historical data, from the Ethereum network. By getting rid of this historical data, congestion on the network will decrease, allowing for more transactions to be processed. Buterin has said that after this phase Ethereum should be able to process around 100,000 transactions per second (TPS), up from about 29 TPS now.
Buterin added the “Scourge” as the latest element for Ethereum to tackle, in an effort to make the blockchain a credible and neutral place for transaction inclusion, while simultaneously avoiding centralization around MEV.
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As Ethereum transitions from a young experimental technology into a mature tech stack that is capable of actually bringing an open, global and permissionless experience to average users, there are three major technical transitions that the stack needs to undergo, roughly simultaneously:...
- The L2 scaling transition - everyone moving to rollups
- The wallet security transition - everyone moving to smart contract wallets
- The privacy transition - making sure privacy-preserving funds transfers are available, and making sure all of the other gadgets that are being developed (social recovery, identity, reputation) are privacy-preserving
It’s been a little over a year since Ethereum, the largest smart-contract blockchain, switched out its old energy intensive proof-of-work (PoW) model, used by blockchains like Bitcoin, for proof-of-stake (PoS).
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... Here are five takeaways that the Ethereum ecosystem has learned over the last year since the Merge:
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A year on from the Merge, and Ethereum’s new emission numbers have dropped drastically. Ethereum’s new proof-of-stake system consumes 99.9% less energy than its old mining-based system. Whatever the other successes – or failures – of the upgrade, it is now much harder to paint Etheruem as harmful to the environment.
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A year on from the Merge, however, centralization remains one of Ethereum’s biggest challenges. To stake on Ethereum, a validator needs to lock up 32 ETH, or roughly $50,000 with the network – funds that earn a steady stream of interest, but can be revoked if a validator errs or acts dishonestly. Setting up a validator node to stake on the network can also be a complicated task, meaning financial penalties can result if things are set up improperly.
Because of the expense and technical barriers to setting up a node, intermediary services arose – from companies like Coinbase and “decentralized” collectives like Lido – allowing users to pool their ETH together to create 32 ETH for a node. These intermediary entities do most of the heavy lifting: they take ETH from users, stake it on their behalf, and take a cut of the rewards that they earn from operating a validator.
Even before the Merge, some anti-PoS advocates feared staking could increase Ethereum’s centralization – meaning a small number of these intermediaries (or even a single one) might gain disproportionate control over which blocks are added to the network.
That scenario seems to be playing out: currently, the largest staking provider is Lido, the biggest decentralized staking pool. Lido currently accounts for 32.3% of the total share of staked ETH, leading to concerns of centralization as it nears the 33% mark, a threshold that developers say could cause security problems.
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After the Merge, Ethereum’s validators have managed to net significant extra profits via a practice called maximal extractable value (MEV). This is sometimes seen as an “invisible tax” that validators and builders can collect from users by strategically inserting or reordering transactions before they’re added to the network.
When MEV became an unexpected vector of centralization and censorship on the network, third-parties stepped in to try and address some of the practice’s more pernicious side-effects.
Flashbots, an Ethereum research and development firm, invented MEV-boost, a piece of software that validators can run to reduce negative side-effects of MEV. Flashbots’ solution to the MEV problem is a controversial one, however. While some think MEV should be eradicated altogether, Flashbots’ introduced MEV-Boost to make the practice ubiquitous.
Currently, about 90% blocks on Ethereum go through MEV-Boost, which optimizes how transactions are organized into blocks in order to extract the maximum profit for validators.
The popularity of MEV-boost has become a point of contention for the network. As mentioned, MEV is viewed by some as an unfair tax on users. Flashbots’ central role in Ethereum’s MEV market has come under fire: most blocks assembled via Flashbots’ software are “relayed” – or delivered to validators – via Flashbots itself.
This kind of centralization has been viewed by some as a potential vector for censorship: when the U.S. Treasury Department sanctioned some Ethereum addresses associated with Tornado Cash, a mixer program, Flashbots stopped adding those transactions to the blocks it sends to the validator. This move was anathema to Ethereum builders who think that the infrastructure level occupied by Flashbots should be completely neutral – lest the entire network become more similar to centralized payment processors like Visa.
Since the early days of the Merge, the Ethereum community has made efforts to reduce censorship by configuring MEV-Boost to use non-Flashbots relays. Currently, 17.3% of blocks rely on Flashbots’ relay to extract MEV, and censorship is down to 35%, a tremendous reversal compared to its highpoint of 78% in November 2022.
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Staked ETH was impossible for stakers to withdraw before the Shapella upgrade in April 2023, so people initially turned to liquid staking to earn staking yields without the risk of locking up tokens for an unknown amount of time. Once it became possible to withdraw staked ETH — removing one of the key risks of staking, but eroding one of the value-adds of LSTs — some thought the liquid staking market might shrink in favor of conventional staking. That’s not what happened.
Currently, the liquid staking market is worth almost $20 billion, and it is growing rapidly — largely due to the ubiquity of LSTs in DeFi and the accessibility of LSTs compared to conventional staking. Lido’s token, stETH, represents the largest share in the LST market, with about 72.24% of the total share of LSTs.
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The Merge update came with some tweaks to ether’s tokenomics – the rules underpinning the blockchain’s native token.
Most notably, the upgrade made ETH “deflationary” for the first time, meaning that the overall supply of the token is now decreasing rather than increasing. The circulating supply of ETH today is .24% lower than it was a year ago. ...
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"The thing that was missing, the big ingredient that was missing from public blockchains that we've now really figured out is privacy," he adds, explaining that without it, your competition could see things like how much inventory you have and where you're moving it.
"So, the big breakthrough that we've been waiting for, and I feel like we really have finally achieved, is the ability to have secure private transactions on public blockchains," he said, predicting that we're about to enter a "new era of real adoption."
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... This week’s publication of a research paper outlining the design for BitVM, “a computing paradigm to express Turing-complete Bitcoin contracts,” got bitcoiners buzzing on social-media forums. The big idea is that Ethereum-style smart contracts and might be coming to Bitcoin, raising the possibility of a existential transformation of the originally payments-focused blockchain ... “BitVM is an amazing breakthrough because while there are many gaping holes right now in the BitVM, they are mostly solvable,” Bob Bodily, CEO of Bioniq.io, a Bitcoin Ordinals marketplace, wrote in a post on X. ...
Was Ethereum hacked?
The recent sale of 1,700 ETH, valued at over $2.7 million, by the Ethereum Foundation has prompted speculation about the impact on ETH’s price. Meanwhile, over the last day, the value of ETH has dropped by nearly 2%, and it’s currently trading at $1,576.
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... Meanwhile, since the sale of these tokens, there has been panic within the ecosystem. Also, it has contributed to the negative sentiment in the market since today.
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I'm not seeing any news to that effect. Was your comment in response to the market price?
FWIW:
Ethereum (ETH) Price Prediction as its Foundation Sells 1,700 ETH worth Over $2.7 Million – Is this Good for ETH?
The recent sale of 1,700 ETH, valued at over $2.7 million, by the Ethereum Foundation has prompted speculation about the impact on ETH'stechreport.com
Ethereum is likely entering a new regime dominated by low network revenue generated from fees, testing its native token ether's (ETH) deflationary supply narrative, crypto data analytics firm IntoTheBlock said in a report.
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Ethereum users over the past years' bull market complained about high transaction costs – also known as gas fees – while the network was prone to clogging due to increased activity from non-fungible token (NFT) trading and decentralized finance (DeFi) yield farming. Those days are gone as prices for cryptocurrencies cratered, demand for NFTs collapsed, and DeFi activity plummeted.
The proliferation of layer 2s, which have been developed to help Ethereum scale and increase its capacity, has also contributed to bringing down fees, the report noted. While the development is positive for Ethereum users who can execute transactions cheaper than before, it impacts ETH's supply by keeping it inflationary by burning fewer tokens than new issuance.
"The decrease in fees is putting ETH's 'ultra sound money' thesis to a test," said Lucas Outumuro, IntoTheBlock's head of research.
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Ethereum’s Dencun upgrade, likely to take place in first-quarter 2024, is the next step in the blockchain’s journey to becoming a scalable settlement layer, Goldman Sachs (GS) said in a note Thursday.
“Dencun’s primary impact will be to increase its data availability for layer-2 rollups via proto-danksharding, resulting in a reduction of rollup transaction costs which will be passed on to end users,” the bank said.
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“Dencun will enhance Ethereum’s scalability via rollups,” and will “optimize gas fees and improve the network’s security and implement a number of housekeeping updates,” the report added.
Ethereum research and development firm Nil Foundation announced Tuesday that it's coming out with its own rollup network, called “=nil;.”
The foundation says the new network will be Ethereum's first ZK rollup to enable sharding – an alchemy that combines two popular scaling technologies, zero-knowledge proofs and sharding. The combination should enable composability without compromising the security of the network, according to a press release.
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... Key elements include:
- zkRollup with Sharding: The core of =nil; is a provable sharding protocol, enabling horizontal scalability without compromising security or efficiency. This approach addresses some of the current limitations of vertical scaling (L3, L4, etc.), namely data and liquidity fragmentation.
- Direct Ethereum data access: The ability to call Ethereum’s original data from L2 applications allows us to reuse already deployed applications. Direct access to L1 data from L2 ensures a more unified and seamless environment.
Through zkSharding =nil; benefits from advantages of both monolithic and modular designs including:...
- Scalability
- No scalability limitations as the execution is parallel. Throughput is estimated to be around 60k ERC-20 transfers per second with roughly 400 nodes.
Ether (ETH) broke out from its downtrend and could head towards $3,000 as the recent altcoin frenzy revitalized network activity, Markus Thielen, research head of Matrixport, noted in a report this week.
"Revenues for the Ethereum ecosystem are bottoming out from depressed levels; this could signal a tradeable bottom for ETH," said Thielen.
Ethereum's weekly revenue – which is the income from the network's transaction fees, also known as gas – recently rose above $30 million for two consecutive weeks, up from a yearly low of $12 million hit in early October, Token Terminal data shows.
"A tactical bullish trade could have merit for as long as weekly Ethereum fees stay above $30 million," Thielen added, setting a $3,000 price target based on technical chart patterns.
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Capital rotation from bitcoin to altcoins helped spur user activity on Ethereum, which is the foundation of many decentralized finance (DeFi) protocols and decentralized exchanges (DEXs), IntoTheBlock pointed out.
The network settled $250 billion of asset transfers last week, the most in value since the mid-March regional banking crisis and up from $105 billion in late August, per IntoTheBlock data.
As a result of soaring activity on Ethereum, blockchain data shows that more ETH was burned than added to its supply over the past week, turning the token deflationary after two months of being inflationary.
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According to a post from X (formerly Twitter) user Summers, BlackRock is now looking to launch a spot Ether ETF. “The iShares Ethereum Trust has just been registered in Delaware,” they wrote.
“For context, BlackRock's iShares Bitcoin Trust was registered in a similar manner 7 days before they filed the ETF application with the SEC,” Summers added.
iShares Ether ETF filing. Source: Twitter
Bloomberg Intelligence ETF analyst James Seyffart confirmed the filing cited by Summers but stopped short of saying that BlackRock made the filing.
“Multiple people asking "is this real" -- yes it’s real,” Seyffart said. “An entity with this name was indeed registered in Delaware. That's all we can really confirm at this time. Those images are real and from the State of Delaware website.”
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... ideas the Ethereum developers/community were hashing out to mitigate the MEV issue. ...
... some researchers and users of Ethereum, the world's second-largest blockchain, are increasingly troubled by data showing a marked increase in censorship – what appears to be a concerted effort by block builders to exclude transactions linked to entities sanctioned by the U.S. government.
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Blocknative, a blockchain infrastructure company that cut staff in October after suspending work on a major business project, is releasing a new tool to examine the "mempool" of pending transactions awaiting processing on Ethereum, an effort that could ultimately help to reduce instances of b-level manipulation and protect users from front-running bots.
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Ethernow could ultimately help wallet providers give end-users feedback on transaction status, and provide suggestions for MEV protections, as well as help stablecoin issuers monitor potentially problematic transactions earlier in their lifecycle, Cutler told CoinDesk.
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Ethereum developers are heating up their testing process for the upcoming Dencun upgrade ...
In a biweekly call Thursday, the developers discussed that they are targeting Jan. 17 for the Goerli test network (testnet) to run through Dencun, the much-anticipated upgrade that will enable “proto-danksharding,” which reduces fees for layer 2 rollups and scale the blockchain by increasing space for “blobs” of data.
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Developers also discussed a draft timeline for the Dencun testing upgrade, aiming to run through another test network, Sepolia, on Jan. 31, the Holesky testnet on Feb. 7, and then proceeding to deploy the changes on mainnet around the end of February. These dates could change depending on the outcome of the testnet forks, they cautioned.
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Developers will run through Dencun on the Sepolia and Holesky testnets on Jan. 30 and Feb. 7, putting the upgrade on track to reach the main network in late February or early March.
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The final dress rehearsal for Ethereum’s upcoming Dencun upgrade occurred Wednesday, as the blockchain's biggest changes in almost a year took place on the Holesky test network.
The test simulated “proto-danksharding,” a technical feature aimed at reducing the cost of transactions for rollups as well as making data availability cheaper, through the introduction of “blobs,” a new compartmentalized space for storing data.
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Holesky was the last of three testnets to run through a simulation of Dencun, and was the most anticipated, since Holesky is the newest of all three testnets, with a validator set larger than Ethereum’s own network.
So in theory, if upgrades run smoothly on the Holesky blockchain, the process should go without any hiccups on mainnet.
Ethereum developers will meet on Thursday for their biweekly consensus layer call to ink a date for the mainnet Dencun upgrade, projected to happen sometime in late February or early March.
Ethereum developers set a target date of March 13 for its long-awaited Dencun upgrade during a bi-weekly coordinating call on Thursday, officially triggering the countdown to the blockchain's biggest changes since April 2023.
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Bitcoin's (BTC) recent rally has been driven by the spectacular introduction of exchange-traded funds (ETF). It may be time to now focus on ether (ETH), the second-largest cryptocurrency, broker Bernstein said in a research report on Monday.
Ether is "probably the only other digital asset likely to get a spot ETF approval by the SEC," the report said.
Bernstein says there is about a 50% chance of ether spot ETF approval by May and near-certain probability of approval in the next 12 months.
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"Ethereum with its staking yield dynamics, environmentally friendly design, and institutional utility to build new financial markets, is well positioned for mainstream institutional adoption," analysts Gautam Chhugani and Mahika Sapra wrote.
Ether yield markets would grow in lockstep with the crypto's market cap and could "power unique ETFs, if the staking yields are included in the ETF design," the authors wrote.
The broker notes that institutions don't just want to launch ether spot ETFs, they want to "build more transparent and open tokenized financial markets on the Ethereum network," adding that the "utility is beyond asset gathering."
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Ether (ETH), the second-largest cryptocurrency by market value, has outpaced bitcoin's (BTC) rally over the past week, a trend that could continue because the fundamentals for Ethereum's native token appear more favorable than those of the larger crypto, according to Greg Magadini, Amberdata's director of derivatives.
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The focus could soon shift to the significant drop in ether supply since Ethereum transitioned to a proof-of-stake consensus mechanism in September 2022 in an upgrade dubbed The Merge, Magadini said. That contrasts with Bitcoin's halving, which just slows the cryptocurrency's rate of growth.
"Everyone is talking about the Bitcoin halving in April, but that’s nothing compared to the active 'REDUCTION' in ETH supply already occurring since Sept. 2022," Magadini said in a weekly newsletter. "ETH is the next play here! Low ETH/BTC ratio, actively finding a bid, [with ETH's] fundamental supply picture even better than BTC."
Since the Merge, 1,047,643 ETH ($3.05 billion) have been issued and 1,407,200 ETH burned, or taken out of circulation, causing a net supply reduction of 359,557 ETH or 0.209% year-on-year, according to data tracking website Ultrasound.money. Bitcoin's supply increased 1.71% in the same period.
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March 13 - Dencun upgrade
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To get an understanding of what this upgrade entails, Kitco Crypto reached out to experts in the field, who provided insights into what the Dencun upgrade means for the Ethereum community and why ETH holders see it as a bullish development.
According to Kerel Verwaerde, the Chief Marketing Officer for Cryptology.com, “The Dencun upgrade, which is divided into two upgrades – one in the execution and one in the consensus layers – is a continuation of the efforts to make Ethereum more scalable, especially using layer 2s (L2), which paves the way for the continuation of Ethereum being the undisputed king of utility blockchains.”
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“The Dencun (EIP-4844) upgrade could reduce those costs by an order of magnitude or more,” Nielsen said. “Imagine if a company like Slack, which spends an estimated $85 million per year on cloud fees, could see those costs reduced 10x to just $8.5 million annually. Those kinds of savings could be transformative and help spur the uptake of decentralized solutions.”
He noted that “Previous Ethereum upgrades tended to solve narrow problems — things like reducing gas price volatility,” but said EIP-4844 “could take Ethereum to the next level by fundamentally improving its scaling and efficiency through vastly lower settlement fees. That doesn't just close gaps – it enhances Ethereum's core capabilities.”
“If EIP-4844 can deliver on its promise of reducing costs by 10x or 100x as hoped, it could ignite a Cambrian explosion of activity and use cases across Layer 2 networks,” Nielsen concluded. “The future is bright if we can unleash the pent-up potential of the burgeoning L2 ecosystem.”
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The U.S. Securities and Exchange Commission (SEC) on Monday delayed making any decision on ether (ETH) exchange-traded fund applications from BlackRock and Fidelity on Monday, launching comment periods for both applications in the process.
The SEC asked public commenters to explain if they agree with Fidelity, BlackRock, Cboe and Nasdaq that the arguments made in favor of the recently approved spot bitcoin ETFs similarly support ETFs that would hold Ethereum's ether. The regulator also wants feedback on whether spot ether ETFs might be susceptible to manipulation and whether spot and futures ether exchange-traded products are similar.
Continuing delays in the next few weeks are to be expected, with May 23 being the date to watch for, said James Seyffart, an analyst with Bloomberg Intelligence. The SEC should have made a final decision on the applications by then. But there are other signs that might indicate how the SEC is viewing these applications over the next month or so.
If applicants start filing updates to their documentation that suggest they're incorporating feedback directly from the regulator – similarly to the back-and-forth in the weeks before bitcoin ETFs were approved in January – it would be a sign for more optimism, he said.
Issuers have already filed some updates over the past few weeks, but many of these seem to reflect lessons learned from the bitcoin ETF application process, rather than responding to specific guidance or feedback from the SEC.
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Ethereum developers are gearing up for the blockchain's next big upgrade happening next week, called Dencun.
It's supposed to issue in a new era of lower costs for "layer-2" blockchains, including so-called rollup networks that aim to offer faster and cheaper transactions than on the main blockchain. But just how much lower?
Dencun will be the biggest upgrade – technically a "hard fork" in blockchain parlance – that the network will undergo in almost a year.
The main component in Dencun is called EIP-4844, or more commonly “proto-danksharding,” which will bring in a new type of transaction class that reduces the costs of publishing data of transactions on rollups, through the introduction of data “blobs.” These blobs are a separate place in a transaction where rollup networks or other protocols could temporarily stash data – sometimes described as a "side car" that doesn't take up space in the main car.
As a result of more blobs, the costs for these layer-2 networks to stash data on Ethereum will be significantly cheaper, and the reduction is likely to trickle down to users in the form of lower fees.
But how exactly it will all shake out is still ambiguous, according to many Ethereum experts. We asked leading layer-2 teams, including Polygon, Arbitrum, StarkWare and Coinbase's Base, for their predictions post-Dencun.
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The Ethereum network's revenue surged to nearly two year highs this week as the speculative frenzy with meme coins boosted blockchain activity, IntoTheBlock noted in a Friday market report.
IntoTheBlock data shows that Ethereum mainnet's revenue from network fees reached $193 million this week, the highest figure since May 2022 and a 78% increase from last week.
The on-chain activity was largely driven by increased speculation with meme tokens, IntoTheBlock analysts said. Ethereum-based meme tokens such as pepe (PEPE), shiba inu (SHIB) and floki (FLOKI) more than doubled in price over the past week as retail
Meanwhile, trading volumes on decentralized exchanges (DEX) built on top of Ethereum jumped 40% to $20 billion this week, DefiLlama data shows.
The frenzy is benefitting investors who hold ether (ETH), the network's native token, because of its token burning scheme. After Ethereum's transition to a proof-of-stake blockchain – commonly referred to as the Merge –, the network destroys a part of the transaction fees paid by users, decreasing the token's supply.
Over the past week, ETH's supply shrunk by some 33,400 tokens (worth roughly $130 million at current prices), and is deflationary at a 1.45% annualized rate, according to Ultrasound.money data.
On the other hand, the heightened activity has made the blockchain very pricey for users. Average transaction costs (gas fees) on Ethereum rose to as high as $28 this week, making it "unusable" for many users, IntoTheBlock noted.
Fees on layer 2s, designed to scale the Ethereum network, also surged, with transactions costing as much as $1 on Arbitrum, the highest since 2022, the report said. This issue has a quick fix though with the Dencun upgrade coming up next week, which is expected to lower transaction costs on layer 2s to cents.
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Ether (ETH) prices could see a possible correction, Singapore-based digital assets trading firm QCP Capital said in a series of recent notes published to its Telegram channel.
The trading firm is still cautiously optimistic about the long-term potential of ether.
Although ether has sailed past $4,000, its highest price in two years, QCP writes that it’s observing a shift in market sentiment, marked by negative risk reversals. These reversals measure the difference in implied volatility between call and put options and have turned negative, likely due to the low probability of a spot ether ETF being approved in the near future.
Historically, network upgrades like Bitcoin’s Taproot and the Ethereum merge have had minimal impact on pricing under bearish and sideways market conditions, but with current market dynamics, there could be price reflexivity on Ethereum and its Layer 2s, potentially influenced by the already priced-in Dencun upgrade or a positive knee-jerk reaction, along with possible capital inflows into Layer 2 ecosystems, QCP analysts wrote in a Telegram interview with CoinDesk.
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