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Ethereum’s eagerly awaited Dencun Upgrade went live on March 13, 2024. Highlighted by the implementation of EIP-4844 (Proto-Danksharding), it introduces ‘blob-carrying transactions,’ slashing fees for L2 users, and turbocharging Ethereum’s transaction throughput.
This upgrade, geared toward enhancing Ethereum’s scalability, security, and user experience, heralds a new era in blockchain technology. Discover the top 5 Layer-2 Projects poised for substantial growth in 2024.
Top 5 Layer-2 Solutions That Soared After Dencun Upgrade
#1 Polygon (MATIC)
Polygon (MATIC) is a crypto and technology platform that connects and scales blockchain networks. Dubbed “Ethereum’s internet of blockchains, “Polygon debuted in 2017 as Matic Network.
The Polygon platform connects Ethereum-based projects by utilizing the Ethereum blockchain. It can boost a blockchain project’s flexibility, scalability, and governance while still providing the Ethereum blockchain’s security, interoperability, and structural advantages.
MATIC is an ERC-20 token, which means it is interchangeable with other Ethereum-based digital currencies. MATIC manages and secures the Polygon network and collects network transaction fees.
Impact of Dencun Upgrade
The Dencun upgrade’s integration into Ethereum’s mainnet on March 13 ushered in a new era of scalability. While Layer 2 chains stand to benefit significantly from reduced fees courtesy of EIP-4844, the extent and timing of these changes vary across chains. Polygon Labs’ Jarrod Watts provided insights into the upgrade’s impact on Polygon-powered chains. The Polygon zkEVM chain is poised for the most immediate benefits, with two to five times the expected fee reductions. However, other Polygon chains, like PoS and CDK validiums, will see different outcomes, highlighting the nuanced effects of the Dencun upgrade on the ecosystem.
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#2 Optimism (OP)
Optimism (OP) operates as a layer-two blockchain atop Ethereum, leveraging the security of the Ethereum mainnet to scale the Ethereum ecosystem through optimistic rollups. This entails the trustless recording of transactions on Optimism, ultimately secured on Ethereum. As one of Ethereum’s major scaling solutions, it boasts a total value locked (TVL) exceeding $500 million.
Impact of Dencun Upgrade
The launch of the Dencun upgrade has positively impacted Optimism (OP), with its OP token gaining 3% in value. This increase adds to a broader trend, with OP seeing a 27% rise over the past month.
Further contributing to this momentum, the Optimism Foundation’s private sale of 19.5 million OP tokens in early March has garnered attention. The sale, featuring a 2-year vesting period for undisclosed buyers, underscores growing investor interest in Optimism’s potential.
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#3 Arbitrum (ARB)
By offering 40,000 Transactions Per Second (TPS) at a price of no more than two cents, Arbitrum aims to alleviate Ethereum’s congestion.
Optimistic rollups are used to validate the smart contracts on Arbitrum. The EVM compatibility of Arbitrum, however, makes it unique. It implies that DApp creators can create their applications on the Arbitrum mainnet without having to learn a new programming language. For instance, you don’t need additional skills if you are already familiar with the coding language used to create smart contracts on Ethereum.
Impact of Dencun Upgrade
The Dencun upgrade’s impact on Arbitrum (ARB) has been significant, with the Offchain Labs team rolling out an update to ArbOS, known as Atlas. This upgrade introduces support for binary large object (blob) transactions aimed at slashing data transfer costs from Layer 2 to the Ethereum mainnet. Community support for Atlas was evident, with the majority of changes implemented a day prior. Expectations include a tenfold reduction in base transaction fees, from 0.1 Gwei to 0.01 Gwei, translating to significantly lower user costs for operations previously priced at $0.5, now around $0.05.
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#4 Coti Network (COTI)
COTI aims to build a system that solves the problems of traditional finance, such as high expenses and lack of inclusion. It uses a directed acyclic graph (DAG) concept and a Proof of Trust consensus algorithm. The multi-day structure allows businesses to have their tokens, making it the first enterprise-grade fintech platform that empowers organizations to build payment solutions and digitize currencies.
Impact of Dencun Upgrade
The Dencun upgrade’s impact on the Coti Network (COTI) is poised to be transformative, particularly for its privacy-centric Layer 2 solution, COTI V2, integrated within the Ethereum network. With a strategic alignment to Ethereum’s performance and scalability objectives, COTI V2 stands to benefit from the upcoming Dencun upgrade. Anticipated to reduce transaction fees and enhance scalability, Dencun introduces ephemeral data blobs through EIP-4844, optimizing layer-2 transaction efficiency. This upgrade augments COTI V2’s capabilities, facilitating cost reduction and high-frequency trading, driving its projected exponential growth within the Ethereum ecosystem.
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#5 Metis (METIS)
Metis is a Layer-2 scaling solution built by the MetisLab Foundation. Leveraging optimistic rollup technology, it delegates the execution of smart contracts and data storage responsibilities to a layer above networks like Ethereum. Layer-2 solutions like Metis offer a more scalable and cost-effective infrastructure for constructing and engaging with Web3 applications. Noteworthy features of Metis encompass minimal gas fees, transaction processing times of approximately two seconds, and integrated file storage via IPFS.
Moreover, Metis also supports an EVM-compatible virtual machine known as the Metis Virtual Machine (MVM). This execution environment enables developers and users to deploy and interact with applications in an environment reminiscent of Ethereum. The compatibility with Ethereum facilitates the seamless migration of existing projects and code, streamlining user development.
Impact of Dencun Upgrade
The Dencun upgrade has ushered in a series of positive developments for Metis (METIS), driving its growth trajectory forward. These include establishing the 4.6 million $METIS Ecosystem Fund, the impending launch of the decentralized sequencer alpha mainnet in March, and introducing the LSB (Liquid Staking Blitz) campaign to enhance platform functionality and community engagement.
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