Following the #CancunUpgrade , the decline in $ETH ETH gas fees has led to a significant increase in activity on various Layer 2 (L2) solutions.

With the implementation of one-click chain issuance and modular blockchain technology, the cost of chain issuance has plummeted, making it comparable to coin issuance in terms of affordability🏮🏮.

This signals a promising future for L2 adoption, which will likely be driven by ecosystem growth and development.
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The #ethereum2.0 upgrade involves Proof of Stake ( #POS ) and #sharding , reducing energy use and boosting transaction speed. The #CancunUpgrade focuses on scalability, security, and efficiency by introducing proto-dank sharding. This technique optimizes data management, enhancing transaction affordability. Proto-danksharding, introduced by #EIP-4844 aids in reducing gas fees via blob-carrying transactions. Benefits include improved scalability, reduced costs, enhanced data management, cross-chain communication, and security. Risks involve potential impacts on existing contracts and integrating new techniques. Expected in the first half of 2024, this upgrade represents a significant stride in Ethereum's evolution, promising a more efficient and accessible user experience in decentralized finance. Read fully on binance academy

- After the Cancun upgrade, Ethereum Layer 2 (L2) is expected to witness a significant reduction in average gas fees by at least 10 times.

- The Cancun upgrade will introduce three new Blob spaces on the Ethereum mainnet, specifically for storing L2 transactions and state data, each with its own gas fee market.

- Each Blob space is estimated to have a maximum capacity for state data equivalent to one mainnet block, or ~1.77M.

- The assumption is that if total gas demand for Rollup L2s remains constant, and the available block space for L2s increases from ~10% of one block to three complete Blob blocks, the total supply of block space will expand 30 times, leading to a significant reduction in gas prices.

- However, this conclusion may oversimplify the complex dynamics and competition between Rollup L2s for Blob space, impacting gas prices.

- Rollup L2s face a competitive zero-sum game after the Cancun upgrade, vying for developers, funds, users, and Dapps, along with competition for the three new Blob spaces.

- Leading Rollup L2s may potentially abuse Blob space by modifying the frequency of their sequencer's batch, aiming to synchronize with the Ethereum mainnet block production speed and suppress competitors.

- This competitive strategy could lead to a surge in verification fees and batch fees, limiting the positive impact of new Blob spaces on L2 gas fee reduction.

- Consequently, the predicted decrease in Ethereum L2 gas fees after the Cancun upgrade may be less than initially expected, with diminishing returns as a result of competitive dynamics.

#Ethereum(ETH) #Ethereum2024 #CancunUpgrade