Gushiken Yona
Shibarium, the layer-2 scalability solution of the Shiba Ecosystem, known for its comparatively lower gas fees, is assuming a front-row seat as Ethereum receives heavy scrutiny.
Peter Brandt, a prominent crypto analyst and CEO, cast a spotlight on Ethereum’s persistent issue with “outrageous gas fees,” even after developments like the Dencun upgrade aimed at addressing these concerns.
In a recent critique of Ethereum, Brandt, a veteran analyst and the CEO of the global trading firm Factor LLC, brought to light his concerns regarding the platform’s functionality, zeroing in on two significant issues that, in his view, dampen the appeal of Ethereum for both developers and users alike. Brandt specifically called out the challenges posed by Layer 2 (L2) solutions and the platform’s notorious high transaction fees, also known as “gas fees.”
L2 solutions, which are designed to bolster Ethereum’s scalability by processing transactions off the main blockchain (Layer 1), are intended to offer quicker processing times and lower costs. However, Brandt’s critique suggested that these solutions fall short of their promises, being either overly complex or insufficiently effective.
This complexity and ineffectiveness could potentially deter developers from building on Ethereum and users from adopting it for their transactions. Furthermore, Brandt highlighted the issue of high gas fees, a problem that becomes particularly acute during times of elevated network demand.
These fees can skyrocket, making it cost-prohibitive for users to execute transactions and for developers to run applications efficiently on the blockchain. Such exorbitant costs not only undermine Ethereum’s utility but also its accessibility, posing a substantial barrier to mass adoption.
These issues were to be addressed when Ethereum rolled out the Dencun upgrade last month. In a recent note to The Shib Daily on Ethereum’s latest Dencun upgrade, Andrey Kuznetsov, co-founder of HAQQ, hailed the Dencun upgrade for striking an essential balance between scalability, decentralization, and network performance. Kuznetsov underscored the significance of the upgrade’s Proto-Danksharding feature, describing it as a leap forward in Ethereum’s evolution toward a blockchain that champions not only efficiency and scalability but also prioritizes the user experience.
“Dencun upgrade emphasizes the critical balance between scalability and maintaining decentralization without compromising network performance. I consider Dencun, particularly with its Proto-Danksharding feature, more than a mere technical enhancement; it’s actually a deliberate stride toward realizing Ethereum’s aspiration for a blockchain that’s not only scalable and efficient but also centered around the user experience,” the executive told TSD.
Proto-Danksharding, according to Kuznetsov, revolutionizes how transactions are processed on Layer 2 solutions, significantly reducing transaction costs and fees, thereby drastically improving the user experience. This technical advancement is expected to catalyze a wave of innovative applications across various domains, from social finance to gaming, by allowing retail users to conduct transactions at a fraction of the current cost.
“Technically, Proto-Danksharding is interesting, especially in the way transactions occur on L2s, significantly improving user experience by drastically reducing transaction costs and fees. This upgrade will further open the door to more innovative applications, spanning social finance to gaming, and beyond—enabling retail users to execute transactions at minimal costs. But more importantly, it offers developers the leeway to craft sustainable solutions without the overhead concern of transaction affordability for end-users,” the HAQQ co-founder further said.
The introduction of ‘blobs’—large data packets stored off-chain and referenced in transactions—exemplifies Ethereum’s strategic approach to enhancing network throughput while efficiently managing resource consumption. Kuznetsov sees this development as a milestone not just for Ethereum but for the broader blockchain technology sector, highlighting how innovative solutions can address the perennial challenges of scalability and high transaction fees.
“By introducing ‘blob’ transactions, it addresses a critical bottleneck in data processing and storage on the network. For Ethereum, this upgrade is poised to significantly lower operational costs for L2s, marking a pivotal advancement in Ethereum’s scalability and efficiency. The move towards more efficient data handling with blobs—large data packets stored off-chain and referenced in transactions—reflects a thoughtful approach to improving network throughput while managing resource consumption. For the blockchain technology sector, this development is a beacon of progress, showcasing how innovative solutions can tackle complex challenges like scalability and high transaction fees,” Kuznetsov noted.
The most notable impact of Ethereum’s Dencun upgrade, implemented in March, has been the substantial reduction in L2 transaction fees. This decline in gas fees following the upgrade has invigorated the L2 ecosystem, leading to an average of over 124 transactions per second since the implementation date on March 13. Platforms like Arbitrum, Base, and Optimism have emerged as significant beneficiaries of this development, experiencing a marked increase in activity. This positive change underscores the Dencun upgrade’s critical role in enhancing the scalability and efficiency of Ethereum’s network.
In light of Peter Brandt’s critical view of Ethereum’s “outrageous gas fees,” it’s noteworthy that users of Shibarium have been benefiting from significantly lower transaction fees well before the Ethereum network’s Dencun upgrade. Since its launch in August last year, Shibarium has provided a more cost-efficient alternative for users seeking relief from high fees.
A case in point is a Shibarium user, known by their X (formerly Twitter) handle @Digarch, who reported an exceptionally low swap transaction fee to The Shib Daily. The fee amounted to just 0.000140690604372705 BONE, or approximately $0.0001, showcasing the platform’s ability to offer transactions at a fraction of the cost typically encountered on Ethereum.
It is important to point out the limitations of the Dencun upgrade’s impact on Shibarium. As Shibarium functions as a sidechain, it processes transactions in a manner distinct from the main Ethereum network, transmitting the transaction’s root hash to Ethereum and employing checkpoints. This operational framework sets Shibarium apart from the direct benefits associated with Dencun’s rollup-centric improvements, emphasizing the unique advantages Shibarium holds in the broader context of blockchain efficiency and cost-effectiveness.
Read More
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- Ethereum Layer 2s See Remarkable Fee Reduction Post-Dencun
Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
