Ethereum Post-Dencun TVL Stabilizing

The Dencun upgrade's introduction of "proto-danksharding" has fundamentally altered Layer 2 economics. By creating a separate channel for L2s to post data to the mainnet via "blobs," it has dramatically reduced their data storage costs, a saving that is then passed on to users in the form of lower transaction fees. This has led to a significant drop in average L2 transaction fees, in some cases by as much as 90%. The upcoming Pectra upgrade, anticipated for May 2025, will focus heavily on user experience by implementing EIP-7702. This proposal will grant externally owned accounts (EOAs)—standard Ethereum wallets—the ability to temporarily function like smart contracts. This will enable features such as transaction batching, social account recovery, and allowing users to pay for gas in tokens other than ETH. Pectra also introduces significant changes for staking providers with EIP-7251. This update will allow validators to consolidate their stakes, increasing the maximum effective balance from 32 ETH up to 2048 ETH. This change is expected to streamline operations for institutional and individual stakers by reducing the number of validators they need to manage. Looking further ahead, the Fusaka upgrade, planned for December 2025, is set to deliver substantial scaling improvements. A key feature is Peer Data Availability Sampling (PeerDAS), which will reduce the amount of data nodes need to verify, enabling a significant increase in data capacity and further lowering L2 transaction costs. Despite these upgrades, the proliferation of L2 networks has introduced significant fragmentation. With over 100 L2 blockchains in existence, liquidity and users are spread thin across siloed ecosystems, creating a complex and challenging user experience. This modular design hinders seamless interaction between different L2s, a problem that various interoperability solutions are now trying to address.