Ethereum Dencun upgrade day triggers surge in layer 2 protocol token value

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The imminent launch of the Ethereum Dencun upgrade at 14.00 UTC today, March 13, has sparked a notable surge in the prices of native tokens for layer-2 protocols, including Arbitrum, Polygon, and Optimism.

According to CryptoSlate’s data, the sector has surged by approximately 5% in the last 24 hours, reaching a total market capitalization of $20.21 billion. This growth maintains a consistent upward trend of 10% observed throughout the week.

Layer-2 tokens increase

In the past 24 hours, Arbitrum’s ARB token surged by approximately 10% to reach $2.18. This surge coincides with the team’s planned release of over $1 billion ARB tokens this week.

Arbitrum is the leading layer-2 Ethereum scaling solution, with assets worth approximately $16 billion locked on the platform, according to L2Beat.

During the same period, Polygon network’s MATIC token witnessed a 4% uptick to $1.23, marking its highest value since March 2023. This upward trend is concurrent with a notable increase in the active addresses on the Polygon PoS chain, which recorded over 1 million daily active addresses for 20 consecutive days.

Similarly, Optimism’s OP token rose by 2.26% to $4.5, according to CryptoSlate data, a significant milestone considering its starting point at around $3.5 earlier this month.

Notably, the Optimism Foundation disclosed a private sale of 19.5 million OP tokens last week. While the buyer remains undisclosed, the agreement includes a 2-year vesting period.

Lastly, Loopring’s LRC experienced a more modest gain of 1.34% during the same reporting period, currently trading at $0.43140 as of press time.

Why are they rising?

The token’s price surge can be credited to the upcoming Dencun upgrade, which is set to launch within a few hours.

Dencun aims to improve Ethereum’s network scalability significantly. The integration of EIP-4844, known as proto-dank sharding, will introduce blob-type transactions, lowering transaction costs for layer-2 chains. This move will enable mass scalability via layer-2 rollups by minimizing data availability expenses.

Ethereum layer2 gas fees
Projected Ethereum L2 Networks Gas Fees After Dencun Upgrade. (Source: IntoTheBlock)

Mara Schmiedt, the CEO of Alluvial Finance, told CryptoSlate that the Dencun Upgrade represents a giant leap in Ethereum’s ecosystem resilience and performance.

According to her:

“The combination of Ethereum’s rollup-centric scalability model, the upcoming Dencun upgrade, and the rapid proliferation and transaction growth on L2 points to an optimistic future.”

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