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Ethereum Dencun Upgrade: Solana Reaction is a Competitive Stir 

Last Updated March 15, 2024 8:31 AM
Shraddha Sharma
Last Updated March 15, 2024 8:31 AM

Key Takeaways

  • Solana showcases enthusiasm in price after Ethereum’s Dencun upgrade.
  • Ethereum L2s point at efficiency while Solana TVL inches closer to $4b.
  • Co-founder Vitalik Buterin calls the upgrade ‘basic rollup scaling’ milestone.

After Ethereum underwent Dencun upgrade to increase scalability and efficiency, ETH price has been sluggish. Meanwhile, rival blockchain Solana is just 35% down from its all-time high. Is the upgrade giving Solana a competitive edge?

Aftermath of Ethereum’s Dencun Upgrade

Ethereum’s Dencun went live on March 13 and marked a major step in scalability. Ethereum co-founder Vitalik Buterin took to Warpcast  to state that they have hit a goal of “Basic rollup scaling,” which means they’ve improved how Ethereum handles a lot of transactions at once.

He continues to state that now ETH is moving on to work on two new things: verkle trees and history expiry.

Verkle trees will make it possible for validators to do their job without needing a lot of computer memory. This is like having a really efficient way to check and keep the network secure without taking up almost nil disk space on the nodes. It will also make it much quicker for someone to start participating in the network as a validator to support the network on their own (solo staking).

Ethereum developer Tim Beiko took to X to state that Dencun update is one of the most complicated changes they’ve made to Ethereum since the Merge.

Beiko notes that it also has as many individual updates, known as EIPs (Ethereum Improvement Proposals), as a previous major update called Byzantium.

Meanwhile, ETH price has taken a hit on March 14 and is trading under the psychological level of $4K at press time.

Solana Clocks Gains

Solana on the other hand has clocked in gains. As per CoinGecko data, SOL is trading 36% under its all-time high which was surpassed in 2021. It has gained at least 13% in the run-up to the upgrade in 7 days.

The introduction of EIP-4844 is a crucial update as it aims to alter how transaction fees are calculated and reduce costs for L2s. For instance, ArbOS Atlas is also bringing about reductions in fees for users of Arbitrum One. But what is noteworthy is the hike in dollars locked on Solana. In March, the ecofriendly chain has continued to increase its total value locked (TVL) and is inching closer to $4b.

In 7 days, Solana also experienced a positive shift in investor behavior. As per CoinShares data, it attracted $24m in inflows, despite recently facing a downturn in market confidence due to network outage.

Meanwhile, Ethereum, which has had a strong year in terms of attracting investments, witnessed a slight retreat with $2.1m leaving the platform during the same period.

Solana Nears All-Time-High

The Ethereum Dencun upgrade sets new benchmarks for scalability and efficiency for L2. Meanwhile, despite the February outage in Solana, inflows continue to pour in for the eco-friendly chain. As Ethereum gears up for further upgrades, Solana is making waves, potentially shaking up the second-largest chain competitively.

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