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After Bitcoin’s surge, Ethereum geared to hit the top league with dencun update. Should you invest? | Mint – Mint

all41author 8 months ago 0

Bitcoin is not the only cryptocurrency that has undergone a radical price jump that entailed hitting an unprecedented level of $73,000 on account of massive inflow of institutional money.
The second largest crypto token ETH (run on Ethereum blockchain) has also exhibited a 40 percent spike in the past one month alone. 
The key reason for this jump is believed to be the much-awaited Dencun upgrade of blockchain. Ethereum developers were eagerly awaiting the Dencum upgrade of blockchain, the biggest code change in more than a year.
Ether was trading at $3,980 at 16.00 IST, 1.66 percent lower than a day before.

What is the Dencun upgrade?

Dencun is a portmanteau for the project name Deneb + Cancun. This consists of two upgrades happening together on ethereum’s consensus and execution layers. Dencum upgrade, a hard fork in blockchain terminology, was finalised at 7.40 pm IST.
“Dencun upgrade on Ethereum is set to revolutionize the investor experience by drastically reducing transactions fees, thereby eliminating biggest hurdles of blockchain and larger adoption. Such reduction will make Ethereum more attractive for everyday transactions and also unlock the potential for microtransactions,” says Gaurav Mehta, Co-founder and CEO of Catax – Simple Crypto Taxes.
ALSO READ: India’s crypto woes persist despite Bitcoin surge
In the run up to this upgrade, ether has rallied up to 43 percent in the past one month, as the image below shows.

How will it help investors?

One of the key benefits investors can expect with Dencun upgrade is the reduction of transaction costs on layer 2 networks.
The average transaction costs on layer solutions such as Optimism and Base fall following the Dencun upgrade, reported CoinDesk.
ALSO READ: Bitcoin reaches all-time high of $72,000, should you invest? Here’s what experts say
The average cost of transactions on Optimism has declined to around 4 cents from the recent average of around $1.4, CoinDesk wrote, quoting blockchain analyst Marcov’s Dune-based tracker. The average fee on Coinbase’s layer 2 solution Base fell to 3 cents from roughly $1.50, while Arbitrum declined to 40 cents, the report further said.
So, besides the price spike exhibited by Ether, layer 2 tokens are also likely to witness a jump in their prices following the upgrade.
“The market is optimistic about Dencun upgrade. On CoinSwitch ETH trading volume is up 340 percent this quarter as compared to 2023 and Layer 2 tokens are also in demand: Arbitrum vol is up by 400 per cent, Optimism by 411 per cent, and MATIC (Polygon) by 200 per cent,” says Ashish Singhal, Co-founder, CoinSwitch.
Neeraj Khandelwal, co-founder, CoinDCX and Okto, says, “While rollups, or Layer 2 solutions in Ethereum, have provided some relief, upgrades like Duncan and the earlier ‘The Merge’ have truly been game-changers. With Duncan, transaction fees are poised to plummet to almost zero.”
“Currently, DeFi boasts 15 million daily transacting users, a number projected to surge to 100 million by 2025. The prospect of mass adoption of blockchain technology looms large, and these upgrades are certain to incentivize developers to build even more innovative use cases,” Khandelwal adds. 
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