The Dencun upgrade, set to activate on the Ethereum mainnet on March 13, marks another pivotal milestone in Ethereum’s evolution. However, despite the excitement surrounding recent market momentum, Dencun hasn’t captured as much attention as previous major upgrades. With the rapid rise of Bitcoin’s ecosystem and Solana’s growing dominance, Ethereum appears to be facing renewed competitive pressure.
👉 Discover how Ethereum’s latest upgrade could reshape the future of decentralized networks.
The Reality Behind Gas Fee Expectations
In recent months, Ethereum’s on-chain activity has surged, driven by strong market performance. This increased activity has led to a sharp rise in transaction fees. According to OKLink data, average gas prices have climbed nearly 236% over the past two months, with daily average transaction costs exceeding $20 over the last week. On March 6 alone, the average fee reached $31.22—the highest since June 2022.
With transaction costs routinely hitting double-digit dollar amounts, many users are hoping the Dencun upgrade will bring relief. However, there is a widespread misunderstanding about what this upgrade actually achieves.
The core of Dencun is EIP-4844, which introduces blob-carrying transactions to create additional data storage space. This innovation primarily reduces data availability costs for Layer 2 (L2) networks—costs that previously accounted for over 90% of L2 gas expenditures. As a result, Dencun lowers gas fees for users transacting on Ethereum’s L2s, not directly on the Ethereum mainnet.
This distinction is critical: only those using L2 solutions like Arbitrum, Optimism, or zkSync will experience significant fee reductions. Mainnet users won’t see immediate benefits. Currently, L2 transactions account for about 10% of total daily gas consumption on Ethereum. Even if L2 fees drop tenfold post-upgrade—as some predict—the overall impact on mainnet gas prices may remain minimal during periods of high network demand.
While figures like Eric.eth argue that “L2 is Ethereum” and envision future mainnet fees dropping to just $0.01, such outcomes depend on broader scalability progress beyond Dencun alone.
Long-Term Impact on Layer 2 Ecosystems
Although Dencun will undoubtedly lower L2 transaction costs, long-term benefits may fall short of market expectations. Post-upgrade, increased competition among L2 projects for blob space and a surge in overall L2 activity could offset initial savings. As more users migrate to cheaper L2 environments, congestion within these networks may rise, potentially stabilizing or even increasing effective transaction costs over time.
Nonetheless, Dencun remains one of the most significant developments for Ethereum in 2025. It officially ushers in the Surge phase of Ethereum’s roadmap—focused on scalability through rollups—and is expected to accelerate adoption across the L2 landscape. This upgrade could serve as a catalyst for explosive growth in Ethereum’s modular ecosystem, attracting new developers, applications, and capital.
Ethereum ETF Prospects: Cautious Optimism
Another anticipated catalyst for Ethereum is the potential approval of a spot ETF. Unlike Bitcoin’s ETF journey—which drew massive institutional and public interest—Ethereum’s path has been quieter and more uncertain.
Bloomberg’s senior ETF analyst recently revised the odds of a May 2025 approval from 60% down to 30%. Regulatory ambiguity persists over whether Ethereum should be classified as a commodity or security. Additionally, SEC scrutiny around staking services complicates matters. In early 2023, the SEC ordered Kraken to halt its U.S.-based staking program and later sued Coinbase over similar offerings, arguing they constitute unregistered securities.
Despite these headwinds, confidence in Ethereum remains strong. As of March 2025, over 40 million ETH are staked across the network—a staggering 34% of the total supply. This rising staking rate reflects deep-rooted belief in Ethereum’s long-term value and security model.
Historical precedent also tempers expectations. When Ethereum futures ETFs launched in October 2024, they saw lackluster trading volumes—only a few million dollars in the first hours—compared to Bitcoin ETFs, which attracted hundreds of millions quickly. While Wall Street will continue offering Ethereum-linked products regardless, don’t expect a similar market frenzy.
👉 See how institutional interest is shaping the next era of crypto investments.
Is Ethereum Losing Ground to Bitcoin and Solana?
While Dencun and ETF speculation offer hope, Ethereum faces real competition from emerging ecosystems—particularly Bitcoin and Solana.
Bitcoin's Evolving Role
The introduction of the Ordinals protocol has transformed Bitcoin from “digital gold” into a platform capable of supporting rich on-chain applications. Over the past year, Bitcoin’s BRC-20 token standard has grown into a $4 billion+ market, with average annual gains nearing 40x.
Yet technical limitations—such as low throughput and slow block times—prevent Bitcoin from hosting large-scale dApps today. Its ecosystem narrative also remains narrow, centered largely around inscriptions rather than diverse use cases.
Crucially, Bitcoin doesn’t need to replicate Ethereum’s path. Instead, focusing on native innovations like Ordinals and Runes may unlock its second wave of growth—without sacrificing decentralization or security.
Solana: A True Challenger?
Solana is increasingly viewed as Ethereum’s most formidable rival. Technologically, it boasts superior throughput, sub-second finality, and ultra-low fees—capable of handling traditional finance-grade workloads.
Before Solana, no blockchain could deliver both high performance and low cost at scale. Its architecture prioritizes seamless user and developer experiences, much like iOS compared to Android.
In contrast, Ethereum emphasizes modularity and decentralization—offering a flexible foundation where developers can innovate across layers. Think of it as Android: open, customizable, and community-driven.
Thus, Ethereum and Solana aren’t mutually exclusive. Ethereum aims to become a decentralized world computer; Solana’s original vision was to be “the Nasdaq of blockchains.” One builds infrastructure for permissionless innovation; the other optimizes for speed and integration.
Rather than destroying Ethereum’s ecosystem, Solana may help bridge Web3 with mainstream financial systems—accelerating adoption beyond crypto-native circles.
Frequently Asked Questions (FAQ)
Q: Does the Dencun upgrade reduce Ethereum mainnet gas fees?
A: No. Dencun (via EIP-4844) primarily reduces data storage costs for Layer 2 networks. Mainnet gas fees are unaffected directly.
Q: Who benefits most from the Dencun upgrade?
A: Users and developers on Ethereum’s Layer 2 rollups—such as Arbitrum, Optimism, and zkSync—will enjoy significantly lower transaction costs.
Q: Could Ethereum’s spot ETF be approved in 2025?
A: Possible, but not guaranteed. Regulatory uncertainty and classification debates remain key hurdles. Current estimates suggest less than a 30% chance by May 2025.
Q: Why is Solana considered a threat to Ethereum?
A: Solana offers faster transactions and lower fees than Ethereum’s mainnet today. Its performance makes it attractive for consumer-facing apps and high-frequency trading.
Q: Will Bitcoin surpass Ethereum in DeFi or smart contracts?
A: Unlikely in the near term. Bitcoin’s design prioritizes security and simplicity over programmability. Most advanced DeFi innovation will continue on platforms like Ethereum.
Q: Is high gas on Ethereum a long-term problem?
A: For mainnet users, yes—unless further scaling solutions emerge. But with L2 adoption growing rapidly, most activity (and fee relief) will shift off-chain.
While challenges loom large, Ethereum remains the epicenter of decentralized innovation—backed by robust security, deep developer talent, and an evolving modular stack. The Dencun upgrade won’t slash mainnet gas fees overnight, but it strengthens the foundation for a scalable, multi-layered future.
👉 Explore how the next phase of Ethereum could redefine digital ownership and finance.