The Dencun update of Ethereum, implemented in March 2024, has had a significant impact on layer two (L2) networks.
The main effect of Dencun on L2 is the consolidation of low fees. Before this update, L2s already allowed for faster and cheaper transaction processing, offloading most of the daily activity from the main network (L1). However, after Dencun:
Fees on major L2s have fallen below USD 0.01.
The update introduced two key structures: 'proto-danksharding' and 'blobs'. These innovations were fundamental to achieving the reduction and stability of low fees in L2.
This has reinforced the trend that most daily activity in the Ethereum ecosystem, such as interactions with accounts and transactions, concentrates on L2, while L1 acts as the settlement and security layer.
Although much of the daily activity of the Ethereum ecosystem has shifted to layer two (L2) networks, the main layer (L1) remains fundamental and relevant.
The relevance of L1 lies in its function as the secure settlement layer. That is, while L2s process transactions more quickly and cheaply, relieving the burden of the base layer, the main layer acts as the security and settlement foundation for the entire ecosystem.
