Grayscale Research Identifies Dencun Upgrade as ‘Coming of Age’ Event for Ethereum


Grayscale Research’s latest report explains that Ethereum is poised to take advantage of several tailwinds with its upcoming Dencun upgrade. Grayscale analyst Will Ogden states that, while Ethereum is facing increased competition from other chains like Solana, Dencun’s modularity focus will help it “come of age,” lowering transaction fees for rollups and opening the doors for more volume to be moved using these solutions.

Grayscale Research: Dencun Will Help Ethereum Grow Up

A new report from Grayscale Research has framed Dencun, the upcoming Ethereum upgrade, as a “coming of age” event for the network, allowing it to grow up and solidify its Ethereum 2.0 proposal. The report states that ether is ready to reap the benefits of this upgrade, which makes it more modular, alongside other factors.

While ether performed worse than other smart contracts networks during 2023, getting worse results than Solana and Avalanche, Grayscale attributes it to the pains of Ethereum going through an “adolescent phase.” However, the institution acknowledges that the network security, its total value locked (TVL) numbers, and its fee market, among others, have contributed to making Ethereum “arguably the most secure and trusted smart contract platform as well as the largest in market cap.”

This “adolescent phase,” according to Grayscale analyst William Ogden, is marked by its slow transaction speeds, low throughput, and high costs for users. Dencun aims to solve all of these problems, deepening the modular design of Ethereum’s expansion and tackling the high fee-low throughput problem simultaneously.

Dencun will introduce an upgrade that significantly lowers the cost of rollup transactions. This change is expected to impact the use of structures like Arbitrum and Base. At the same time, this empowers Ethereum’s role as a settlement layer, a position previously threatened by the emergence of solutions like Celestia.

Grayscale also argues that the rise of solutions like Eigenlayer, which allows using staked ether as a security element across various chains, could bring the “security as a service” vision to more projects.

“While the future remains uncertain, we believe the Ethereum ecosystem remains well positioned to solidify its place as the preeminent smart contract platform,” Grayscale concluded.

Source : Bitcoin News by Sergio Goschenko / Feb 26, 2024 logo


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