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Ethereum’s Dencun upgrade goes live: how it impacts L2 gas fees

Ethereum’s Dencun upgrade goes live: how it impacts L2 gas fees

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Hello, Crypto Briefers!

Huge developments are underway in the crypto space as we run with the bull cycle. Spirits are high and greed has gone extreme, and yet important tech updates continue to show that the industry is maturing at a rapid pace.

Yes, blobs are here. But what exactly are blobs? Commentators say that Ethereum’s Dencun upgrade is somewhat boring (on the technical side, perhaps). The important question here, however, is to what extent does its impact on gas fees affect layer 2 solutions.

The upgrade is aimed at reducing gas fees for layer 2 blockchains using blobs to store and optimize transaction data. While this upgrade is expected to enhance accessibility and innovation, the actual reduction in gas fees may vary as projects adapt to the changes.

Back in the White House, President Joe Biden has revived his proposal to impose a 30% tax on the electricity used by crypto miners in his 2025 budget plan. This plan, which would be rolled out in three phases starting in late 2024, has the crypto community divided. Some are all for it, while others are raising their eyebrows.

On a more optimistic note, former Blockstream exec Samson Mow is making a bold prediction: Bitcoin would reach $1 million by 2025. He’s got his reasons, of course: growing demand, the upcoming halving, and Bitcoin’s potential to give gold a run for its money. Despite this, Mow isn’t as bullish when it comes to the possibility of an Ethereum ETF.

Today’s Newsletter

  • Ethereum’s Dencun upgrade goes live: how it impacts L2 gas fees
  • Biden resurrects 30% crypto mining tax in new budget proposal
  • “I think this year we hit a million,” says Samson Mow, citing Bitcoin’s supply and demand dynamics

 

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ETHEREUM

Ethereum’s Dencun upgrade goes live: how it impacts L2 gas fees

The upgrade went live today, introducing a new data-storage solution called “blobs” that’s set to optimize transaction data for layer 2 blockchains. This upgrade is expected to significantly reduce gas fees, making layer 2 solutions more accessible to users. Stani Kulechov, the creator of Aave Protocol and CEO of Avara, believes that this upgrade will foster innovation, adoption, and growth within the Ethereum ecosystem.

However, it’s important to note that the actual reduction in gas fees may not be immediate or uniform across all layer 2 projects. As blockchain engineer Bruno Moniz explains, teams behind these projects must adapt to the changes brought by Dencun, which involves modifying transaction data structures, adjusting transaction processing logic, and updating off-chain infrastructure. While most major layer 2 solutions are working closely with Ethereum’s core developers to ensure a smooth transition, some projects, like Blast, have experienced temporary downtime related to the upgrade. [cryptobriefing]

REGULATION

Biden resurrects 30% crypto mining tax in new budget proposal

President Joe Biden’s budget proposal for 2025 has reignited the debate surrounding the taxation of crypto mining activities. The proposal aims to introduce a 30% excise tax on the electricity used by crypto miners, which would be implemented in three phases starting from taxable years after December 31, 2024. Under this plan, mining companies would be required to report the amount and type of electricity they consume, as well as the value of the electricity used, regardless of whether it is purchased externally or generated by the miners themselves.

The proposed tax has drawn mixed reactions from the crypto community, with some viewing it as a potential threat to the industry’s growth in the United States. Senator Cynthia Lummis, a known advocate for cryptocurrencies, has voiced her opposition to the tax, arguing that while the inclusion of crypto in the budget demonstrates the administration’s recognition of the sector, a 30% tax could have detrimental effects on the industry’s foothold in the country. The debate surrounding the proposed tax is expected to continue as stakeholders weigh the potential benefits and drawbacks of such a policy. [cointelegraph]

BITCOIN

“I think this year we hit a million,” says Samson Mow, citing Bitcoin’s supply and demand dynamics

The former Chief Strategy Officer at Blockstream has made a bold prediction about Bitcoin’s future price trajectory. In a recent interview with the “What Bitcoin Did” podcast, Mow stated that he believes Bitcoin could reach the $1 million mark as early as 2024 or 2025. He attributes this potential price surge to Bitcoin’s unique supply and demand dynamics, as well as the upcoming halving event, which is expected to further constrain the supply of new bitcoins entering circulation.

Mow also introduced the concept of the “Veblen effect,” suggesting that as Bitcoin becomes more valuable, it will become more desirable due to its perceived status. He believes that once Bitcoin reaches parity with gold’s market cap, estimated to be between $450,000 and $500,000 per coin, it will begin to “demonetize” gold, as investors start to view Bitcoin as the new store of value. However, despite his bullish outlook on Bitcoin, Mow remains “mega bearish” on the prospect of an Ethereum ETF being approved by the SEC, citing concerns about Ethereum’s issuance model and monetary policy. [cryptobriefing]


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