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ETH Struggles to Hold $4K as Dencun Upgrade Rolls Out
- Ethereum has gained 50% over the past month, putting it on par with Bitcoin despite the latter getting most of the attention.
- However, the release of ETH’s scalability upgrade, Dencun, has been met with a fairly lukewarm reception.
- While some appreciate the renewed focus on integrating L2 scaling solutions, others believe Ethereum developers should focus on reducing Mainnet gas fees.
For now, most of the crypto market’s attention is focussed on Bitcoin, as the first-ever cryptocurrency continues to notch new all-time highs. With the halving drawing closer, BTC will continue to hold court for the time being.
Related: MicroStrategy’s Saylor Challenges BlackRock, Vows to Increase BTC Holdings
Meanwhile, Ethereum has been steadily ticking away – jumping 50% in the past month and 4% over the last seven days. The coin finally breached the USD $4K (AUD $7.06K) barrier again for the first time since late 2021. With the new Dencun upgrade set to massively improve the network’s efficiency, many ETH holders began dreaming of a new ATH of their own. However, the release of Ethereum’s biggest update in over a year was met with a mixed reaction, and the coin’s price has actually struggled in the days following.
So, what gives?
Dencun Doesn’t Solve Issues With “Outdated” Ethereum
The purpose of Dencun was to introduce something known as “protodanksharding” – yes, we agree, it does sound like a meme. Essentially, this update changes how the network processes new data. Instead of pushing transactions through one bottleneck, “sharding” splits these processes into several different forks, reducing the burden on the main network. Sharding has been a popular scaling solution for several other networks in the industry, including Polkadot, Cardano and Zilliqa.
At a glance, there’s no real issue with this – anything that improves scalability, reduces congestion and therefore costs will always be desirable, especially if it doesn’t compromise security. However, several in the community believe this update does very little to address Ethereum’s real issues – sky-high gas fees on the main blockchain.
The Dencun upgrade is targeted at L2s like Arbitrum and Optimism which are already scaling solutions with reasonable transaction costs. For some, this is the logical outcome. Founder and developer of Ethereum, Vitalik Buterin, has been a strong advocate for the blockchain to focus on facilitating a range of L2s as a solution. But others do not believe this is suitable, especially in the short-term.
Despite its severe scalability limitations, ETH is still one of the strongest performers in the current market rally.
Related: Analysts Downgrade Ethereum ETF Approval Odds Due to Lacklustre Engagement
And although Bitcoin is the coin on everyone’s lips for now – it’s only a matter of time before we turn our attention to Ether as the SEC draws closer to deciding on a potential ETF.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
