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Ethereum Dencun Upgrade a Success

Ethereum just underwent its biggest upgrade since The Merge, called “Dencun” which dramatically cuts fees. Plus the news, reports, stats, and top funding rounds of the week.

Author

Ryan Allis
March 20, 2024

Learn More at www.amphibiancapital.com and www.gryphondigitalmining.com

Issue Summary: Welcome back to Coinstack, the weekly newsletter for institutional crypto investors and industry insiders. We review the top news, stats, and reports in the digital asset ecosystem for our 250k weekly subscribers. This week, Ethereum's Dencun upgrade, OKX to pull USDT trading pairs, Dogwifhat memecoin's iconic photo sold as NFT for $4.3m, and big new venture round for Berachain ($69M) and Figure Markets ($60M). 

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Here are all the crypto fundraises we heard about this week, ranked by size…

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Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 5 stories of the week… 

  1. 🚀 What Is Ethereum's Dencun Upgrade And How Does It Help?: The implementation of the Dencun EIP 4844 Upgrade stands as a significant advancement, reducing transaction costs across its network.  costs, stemming from a case it brought against crypto startup DEBT Box. L2 throughput has approached all-time highs following Dencun.

  1. 👋 OKX to pull USDT trading pairs in Europe: The world's fourth largest cryptocurrency exchange by trading volume is ceasing support for USDT trading pairs, an OKX spokesperson told The Block. The delisting comes several months before the EU's scheduled implementation of MiCA, which becomes fully effective on Dec. 30, 2024. The regulation will restrict the use of certain stablecoins in the region. 

  1. 💸 Dogwifhat memecoin's iconic photo sold as NFT for $4.3 million:The purported owner of Achi, the dog behind the Solana-based memecoin Dogwifhat sold the iconic photo of the dog wearing a hat as an NFT for $4.3 million.

  1. ⚖️ SEC charges 17 people in $300 million crypto Ponzi scheme targeting Latino investors: The Securities and Exchange Commission charged 17 people for their roles in an alleged $300 million crypto-related Ponzi scheme that targeted tens of thousands of predominantly Latino investors.

  1. ⚖️ US judge denies motions to dismiss SEC's lawsuit against Gemini Earn program: A U.S. district judge has denied motions from crypto exchange Gemini and crypto lender Genesis to dismiss a case brought by the Securities and Exchange Commission over the Gemini Earn program. 

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💬 Tweet of the Week

Source: @RyanSAdams

📊 Key Stats of the Week

Here are the most important and interesting stats in crypto this week...

1. Solana fee revenue surpassed Bitcoin over the past 7 days.

Source: @RyanSAdams

2. Ethereum's Dencun upgrade introduced 'blobs' for cost-effective data storage, cutting L2 network fees to <1 cent. Post-upgrade, Ethereum data publishing costs plummeted from $2.2M to <$800K as major L2s adopted blobs.

Source: @TheBlockPro__

3. Eigenlayer's restaking protocol hit $10B TVL while http://Ether.fi emerged as a liquid restaking leader with $3B TVL & a $27M raise.

Source: @TheBlockPro__

4. Bitcoin miners saw record daily revenue of $71.7M ahead of the halving, which will cut rewards to 3.125 BTC. The rally boosted earnings, while hashrate tripled since May '21, intensifying competition.

Source: @TheBlockPro__

5. Blast crosses $1B in Total Value Locked, Led by Lending, Decentralized Exchanges, and Yield Games

Source: @OurNetwork

6. Top Moving Coins From the Top 100

📝 Highlights from the Top Crypto Reports

Here are the top highlights from the best crypto research reports this week…

Introduction

Ethereum just underwent its biggest upgrade since The Merge last week. Called “Dencun” — a portmanteau of “Deneb” and “Cancun”, in keeping with a tradition of naming upgrades after stars and cities — Dencun bundled together nine proposed changes to the network.

Of these proposed changes aka Ethereum improvement proposals (EIPs), the most-anticipated was EIP-4844 — considered a major milestone on the road to scalability. EIP-4844 is also known as “protodanksharding” (as inspired by the names of developers Diederik Loerakker aka protolambda and Dankrad Feist).

Why it matters

So why does EIP-4844 matter? First, it introduced the concept of “blobs” — a place to store additional, temporary data on Ethereum blocks. Simply put, blobs are a new place to store rollup data that’s being added to the network. Rollups are layer two (L2) services that reduce the network’s load by processing transactions off-chain and then bringing them back on-chain. Since rollups only need this data temporarily, the blob-data is (mostly) forgotten by the blockchain afterwards.

And since blobs are ephemeral — like Instagram Stories (though in this case designed to expire after 18 days) — they lessen Ethereum’s dependence on permanent data storage. It's also a step towards enabling Ethereum to store even more data blobs via data availability sampling.

Here’s a useful analogy from a16z crypto engineer Noah Citron to help sum up why all this matters: 

  • Think of Ethereum as a highway. 

  • Mainnet transactions are the people riding alone in cars.

  • Rollups are the buses that group people, helping alleviate traffic.

  • EIP-4844 basically adds a “dedicated bus lane” to Ethereum, making the network more efficient. 

  • The Dencun upgrade also paves the way for additional “bus lanes” to be added in future.

Benefits and results

Imagine if rollup data didn’t expire. That would add roughly 83.7 gigabytes of data to the blockchain every month (~31 days), and 985.5 gigabytes per year. This figure would only keep increasing, because remember: blockchains store info permanently.

By regularly expiring, blobs limit the need for that exorbitant data storage — especially as the rest could get stored off-chain via rollups. [To get a more concrete sense of data size for blobs: There’s a target of 3 blobs per Ethereum block, at max 6 blobs per block. Each blob is ~128 KB of data (a vector of 4096 elements of ~32 bytes each).]

EIP-4844 has already drastically reduced costs. A transaction on rollup provider Optimism, for instance, costs less than one tenth of a cent right now [source: l2fees.info] — about 1000x cheaper than transactions cost before the upgrade.

Note, these immediate cost savings are not likely to last. As more people stuff more transactions into rollups, fees will likely increase due to induced demand. [If you’re interested in tracking the blob fee market, check out this Dune analytics dashboard created by Citron: The dashboard shows both the current blob base fee as well as the percentage of the target base fee currently being used.]

Some suggest that the Dencun upgrade could settle anywhere between a 10x-1000x reduction in costs (note: this is purely an estimate). However, a future upgrade called PeerDAS or “full danksharding” is designed to make rollups much more efficient, increasing transaction throughput by another 32x. The key innovation there is adding more shards, and therefore more efficiency — yet without much additional cost.

Full danksharding would therefore allow many bus lanes to be added for the price of just one bus lane — leading to potentially huge throughput increases in the future.

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Tracking the most important blockchain stories of the 2020s, including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may own some of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela. 

Coinstack is a news and analysis newsletter for the digital asset industry. None of the information here is a recommendation to invest in any securities or other types of investments. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

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