The highly anticipated Dencun upgrade for Ethereum, which allows for a reduction in gas fees on layer-2 solutions through proto-dank sharding, has officially launched on March 13. This development has received mixed reactions from speculators, with some expressing doubts while others applaud the upgrade.
Ruslan Lienkha, chief of markets at crypto wallet provider YouHodler, believes that the upgrade will not have a significant impact on the price of ETH in the short term. However, he expects an increase in activity on the blockchain and foresees long-term growth for ETH. Lienkha believes that the upgrade will make ETH more valuable in the face of competition from new innovative layer 1 blockchain projects.
On the other hand, Mara Schmiedt, CEO of liquid staking development firm Alluvial, sees bullish implications for the Dencun upgrade, even in the short term. She highlights the recent institutional surge in Bitcoin and the growing total value locked in Ethereum’s DeFi ecosystem as factors that make this scalability-focused upgrade highly anticipated. Schmiedt believes that Ethereum’s scalability issues have hindered mainstream adoption and the accommodation of the increasing number of users and transactions.
For Onno Sterk, chief operating officer of crypto exchange OSL, the Dencun upgrade is of significant importance as it addresses critical issues that have impeded the network’s development for years. Sterk emphasizes that high transaction fees and limited scalability have not only stifled innovation but also restricted the wider adoption of blockchain technology in various sectors.
Over the past year, ETH has seen a 141% return, driven by optimism surrounding the Dencun upgrade, speculation on the approval of spot Ether exchange-traded funds (ETFs), and the overall recovery of the crypto market. However, ETH’s performance has slightly lagged behind BTC’s 198% return during the same period. While there is anticipation for a favorable decision on Ether ETFs by the U.S. Securities and Exchange Commission in May, not everyone shares this sentiment. Lienkha believes that the SEC will find excuses to postpone the decision, although he still believes that the probability of a positive outcome is high.
Eric Balchunas, senior ETF analyst at Bloomberg, has also cautioned that the odds of an Ethereum ETF approval in May may not be as optimistic as some may expect.
Mara Schmiedt from Alluvial emphasizes that for Ethereum to achieve meaningful adoption, institutional adoption, widespread accessibility, and clear regulatory frameworks are crucial factors. She encourages active participation from the Ethereum community, including developers, users, and investors, to help shape the future of Ethereum.
In summary, the Dencun upgrade has now gone live on the Ethereum mainnet, sparking both excitement and skepticism among speculators. The upgrade aims to address scalability issues and reduce gas fees, which have hindered the network’s development and adoption. The long-term impact on ETH’s price remains uncertain, but there is optimism for its growth in the face of competition from other blockchain projects.