Layer 2 Blockchain Opens New Doors Following Ethereum’s Dencun Upgrade

An Ethereum layer 2 network, Base, has established user metrics incubated by Coinbase, the popular centralized cryptocurrency exchange, that have surged since the Dencun upgrade was made on Ethereum on 13 March. It lowered transaction fees by almost 98% on layer 2 networks. 

The Dencun upgrade included a series of nine distinctive EIPs or Ethereum Improvement Proposals. The main EIP was EIP 4844, dramatically reducing transaction costs on layer 2 networks. Blobs are introduced by EIP 4844, which are special transaction formats segregating layer 2 network transactions and standard network activities on the mainnet Ethereum network. This Dencun upgrade has reduced congestion as well as the costs of transactions. 

It has also allowed the median transaction fees on Base to hit the lowest point of the layer 2 networks. The cost incurred for swapping on the popular decentralized crypto exchange, Uniswap, is currently around $0.0018 while transferring it between digital wallets is $0.004. Overall, swapping on Base is 99.9% cheaper than on the Ethereum network and almost 98% cheaper than that of Arbitrum, the largest Layer 2 network regarding TVL or total value locked. 

Base’s user metrics surged after the Ethereum’s Dencun upgrade and more significantly on 16 March, When active users hit an all-time high of over 855,000. Over 2.1 million transactions were made in one day, hitting an all-time high on 16 March. At the time of writing, cryptocurrency assets worth $709 million are deposited on the base blockchain network, which is another all-time high. 

All of this has increased Base’s rank to 11th among other blockchains by the total value of digital assets deposited and to 4th in terms of Ethereum rollup. 

Base’s top protocol regarding the total value of cryptocurrency assets is the decentralized Aerodrome crypto exchange, with more than $310 million deposited and over $482 million in trade volumes per week. This has also become the new all-time high. AERO, the exchange’s native token, has also surged 19% last week. 

Even with all these developments, users still have greater expectations from Base, believing that there are more areas to improve following the release of the smart wallet by Coinbase. The founder of Base, Jesse Pollack, launched the wallet and introduced it on 1 March to social media users, claiming that it was one of the last pieces of Base to bring thousands of people worldwide on-chain.

Although the wallet is still in its testing phase, once it goes live, traders on the Coinbase platform can use their balance to trade on-chain. This would dramatically enhance Coinbase users’ experience and give them access to the centralized tokens, apps, and NFTs not currently available on the crypto exchange. For protocols, after the wallet is launched, it will potentially open the doors to many new users conducting transactions on-chain for the first time. The close association between Coinbase and Base will make Base one of the biggest beneficiaries of the new development.