Ethereum layer 2 (L2) protocols have seen a significant drop in transaction fees, with some protocols recording a reduction of up to 99% after the Dencun upgrade on Ethereum on March 13. Dencun is a scalability-focused upgrade on the Ethereum mainnet, with many touting it as one of the most significant upgrades since the Merge.

Median transaction fee of L2s. Source: Dune

Starknet, a prominent Ethereum-based L2, has seen a 99% reduction in gas fees after the upgrade. The protocol shared a screenshot of their latest gas fee, which has come down to $0.04 compared to over $6 prior to the Dencun upgrade.

Starknet gas fee. Source: Starknet on X .

Several other L2 platforms, including Optimism, Base, Zora OP mainnet, and others, registered a dramatic decline in gas fees after the Dencun upgrade. The average transaction fees for Optimism dropped to $0.05, $0.064 on Base, $0.5 on Arbitrum and $0.16 on zkSync Era. Within 24 hours of the upgrade, Optimism and chains based on Optimism’s tech stack, like Base, have seen the most critical gas fee reductions.

Optimism L2s transaction cost decline. Source: Optimism on X .

One of the most widely used L2 platforms, Arbitrum One, plans to launch its ArbOS upgrade to introduce blob support to Arbitrum rollup chains later today.

The Dencun hard fork introduced nine different Ethereum Improvement Proposals (EIPs), out of which EIP-484 introduced data blobs and provided Layer 2s with a new transaction datatype called blobs. The latest data blobs bypass the traditional “call data” process to publish information on the Ethereum mainnet, providing faster transactions at lower fees. The Dencun upgrade was two years in the making.

Ethereum Foundation’s Tim Beiko called Dencun “the most complex fork we’ve shipped since the Merge,” and ties with Byzantium for the “most total EIPs in a fork.” 

Scalability and low gas fees were the top goals of the latest Ethereum upgrade. Early indications suggest that the hard fork has helped several L2s cut transaction costs. Experts believe Dencun might be a temporary solution, but it won’t be enough to help scale the Ethereum network .

As the number of rollups using blobs rises and the battle for blob space is predicted to heat up, the low cost on L2 chains using blobs may see increased fees in the future, resulting in higher transaction costs.