The Ethereum network upgrade is scheduled for March 13th and aims to reduce costs for Layer 2 networks. Chains like Arbitrum, Polygon, and Coinbase Global are linked to Ethereum. Transactions that previously cost $1 will now cost 1C. The upgrade, named Dencun by developers, is anticipated to be more efficient than the 2022 introduction of Merge.

According to Coinbase engineer Roberto Bayardo, the update will introduce a new mechanism for data storage. Currently, most Layer 2 blockchains store data on Ethereum. With Dencun, Layer 2 will have the option to store data in a new repository called blobs, which will cost less as the data is held for only eighteen days.

Retired Princeton University professor Ed Felton sees Ethereum's offering as a good trade-off. The change could increase the use of AI in games, allowing non-player characters to display sophisticated behaviors powered by AI modules, which was previously cost-prohibitive. Overall, it will lead to more advanced application capabilities.

The upgrade may also lead to the launch of more Layer 2 chains with lower operating costs. Previously, Layer 2 projects required significant funding to launch and operate, but this is no longer necessary. According to Attestant co-founder Jim McDonald, a chain could be created to issue tickets for exclusive events.

McDonald noted that it may take time for Layer 2 chains to adopt blobs, as Arbitrum's decentralized governance mechanism requires a vote on the change. However, as demand for blobs increases, they will become more active.

Optimism project co-founder Karl Floersch believes that fees will eventually increase, but it will take time.