- The Dencun upgrade caused volatility for L2 tokens.
- Activity on Polygon and Arbitrum grew as fees declined, but Optimism failed to benefit.
Ethereum’s [ETH] Dencun upgrade was expected to have a massive impact on the Ethereum network and its price.
However, along with that, Layer-2 networks were also expected to be impacted due to the introduction of “blobs,” designed to reduce L2 fees significantly.
A surge in volatility
Popular L2 tokens such as Arbitrum [ARB], Optimism [OP], and Polygon [MATIC] witnessed massive fluctuations in terms of price since the launch of Dencun.
There were a significant uptick in the prices of all these token prices, followed by a drop at press time.
In the last 24 hours, the price of ARB grew by 11.87% reaching a high of $2.562 before seeing a correction and falling to $2.0625.
OP’s price witnessed a similar trajectory as it surged by 7.45% before falling back by 4.19%. At press time, OP was trading at $4.32.
MATIC was one of the few tokens that came out on top after witnessing volatility, as it appreciated by 1.1% in the last 24 hours.
How did the networks react?
Similarly, OP and ARB suffered in terms of Network Growth, which declined over the last few days. This indicated that new addresses were losing interest in these tokens.
OP’s number of new addresses stood at 2152 at press time, while ARB stood at 4074.
However, MATIC did not see a similar decline, as its Network Growth was a whopping 187K in the same period. Thus, it could still retain the same level of interest from new users.
Source: Santiment
The frequency at which ARB and OP were being traded had also declined during the same period. ARB’s Velocity was 1.894 at the time of the report, while OP was at 3.188.
Source: Santiment
Along with the declining price, the fees paid to users on L2 networks significantly declined as well. Data from Dune Analytics showed that the fees for most L2s had dropped drastically in the last 24 hours.
Source: Dune Analytics
Coming to network activity, it was seen that both Polygon and Arbitrum witnessed an uptick in activity post the Dencun upgrade.
However, the same couldn’t be said about Optimism, as it failed to capitalize on reduced fees for users.
Read Polygon’s [MATIC] Price Prediction 2024-25
AMBCyrpto’s analysis of Artemis’ data indicated that the daily active addresses on the Optimsim network fell from 115,000 to 73,000 in the last few days.
Source: Santiment
Even though the impact of the Dencun upgrade hasn’t been extremely significant for the L2 networks, the reduced fees may help attract these protocols attract more users in the long run.