Ethereum's Dencun Upgrade Triggers 90-95% Fee Drop, L2 Networks Thrive

The Ethereum network's second-layer fee structure has undergone a significant shift following the implementation of the Dencun upgrade in March 2024, which activated EIP-4844 (Proto-Danksharding). This technical update reduced transaction fees on major rollups by between 90% and 95%, altering the cost paradigm for these networks.

The reduction is largely attributed to the creation of a temporary data space for rollups called 'blobs.' Previously, L2 networks published their transaction data using calldata, competing with other transactions for block space. EIP-4844 establishes an independent fee market for blobs, allowing them to be published at a lower marginal cost.

The impact on network activity has been substantial, with monthly transaction counts exceeding 50 million and unique active addresses reaching multi-year highs. The base fee has stabilized within the 1 to 3 gwei range, reflecting excess capacity on layer 1.

The redistribution of economic value across layers is also noteworthy. In 2025, Layer 2 networks generated total revenues of approximately $129 million, with L2s transferring around $10 million in settlement and security fees to Ethereum's mainnet. The remaining revenue, close to $119 million, was retained by the second-layer network operators.