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Ethereum’s fix for its gas fee problem is now live: What you need to know about the Dencun upgrade

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On Wednesday morning, the Ethereum blockchain completed an upgrade called Dencun, the biggest change to the network’s code in over a year. The upgrade is an important step to help the world’s second most valuable blockchain overcome its scaling challenges, and reduce its infamous gas fees. But what exactly is Dencun and how does it work? Our plain English explainer tells all you need to know.

What is the Dencun upgrade?

Dencun describes two upgrades that took place at the same time on Ethereum. The name combines the “Cancun” upgrade of the execution layer and the “Deneb” upgrade on the consensus layer. The latter refers to how network users agree on the state of the blockchain, while the former refers to how transactions are processed.

In technical terms, the upgrade is the result of a new Ethereum Improvement Proposal (EIP) called “proto-danksharding,” or EIP-4844, which improves the blockchain’s propensity to handle data from secondary networks.

Why did Dencun come about in the first place?

The upgrade will lower gas fees for the growing number of networks built on top of Ethereum that are known as Layer 2 (L2) or “rollups.” This is important since gas fees have historically soared whenever there is a surge of activity on the blockchain, making it unviable to use at a large scale. Roll-ups help address this by processing transactions separately, and then stamping them to the main Ethereum blockchain in batches.

While roll-ups have already made Ethereum more efficient, one issue that is that, post-compression, nodes processing transactions hold on to L2 data infinitely, requiring a greater volume of hardware as time goes on. This has meant that over 90% of the fees on rollups are used for this data storage.

The upgrade means L2 data will be added to the base Ethereum network via fleeting, more efficient “blobs” rather than data held indefinitely. Instead, “blob data” will be stored for 18 days.

What about the main Ethereum network?

The overall effect should be lower costs, but users on the main blockchain (L1) won’t enjoy these lower fees until at least 2026-27, says Pitchbook’s crypto analyst Robert Le, until there is “full danksharding,” referring to a rollup scaling method which provides extra storage for increased transactional capacity.

“Over the next couple of years, you’ll see less and less individual users, whether retail or businesses, transact directly on Ethereum. More will move to L2s and the only ones transacting on Ethereum will be the rollups,” he said.

EIP-4844 marks the beginning of the “Surge” phase for Ethereum, outlined by the network’s co-founder Vitalik Buterin in December. The aim of this phase is to reach 100,000 transactions per second. 

How much will Dencun lower fees?

Gas fees had risen to an average of 98 gwei (a denomination worth one-billionth of an Ether, the native cryptocurrency for the Ethereum blockchain) the week before the upgrade, a level not seen since early May 2023, according to Ethercan data. A swap would cost users $87.45 in gas fees on average, while nonfungible token (NFT) sales average $147 in gas.

L2 fees will drop by a factor of 10 after the upgrade. Swapping tokens on decentralized exchanges, which currently costs $1-2, should fall to around 10-20 cents, and could even go as low as a fraction of a cent.

What does Dencun mean for the price of Ether?

Ether (ETH) has climbed over 150% since October. Last week it broke $4,000, for the second time ever, where it has hovered since, indicating it could soon pass its all-time-high of $4,878.26, reached in November 2021. 

The price surge is part of a broader bull crypto bull market spurred by the approval of Bitcoin ETFs in January, and optimism that regulators will approve Ethereum ETFs too this year. But experts told Fortune they foresee the upgrade having a continued, positive impact on ETH’s price that could be more significant than ETFs, as investors bet on the network’s development potential.

It will be an “absolute game changer” for the token, and is the “bigger story right now,” Matt Hougan, Bitwise’s CIO, told Fortune. 

“There are a billion applications you can build if transactions are below a penny that you can’t build if they range from 10 to 50 cent,” said Hougan. “Once we get them reliably free to people, you will see financial applications, DeFi and NFT’s, but you will also see non-financial applications. I think we’re gonna see this massive explosion of mainstream uses,” he said.

“We’re building a new type of technology, a new type of platform. I think that’s what ETH has going for it on the sentiment side, and why it’s doing so well,” Vance Spencer, founder of Framework Ventures, added.





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United Airlines (UAL) 1Q 2024 earnings

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A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport.

Justin Sullivan | Getty Images

United Airlines on Tuesday cut its aircraft-delivery expectations for the year as it grapples with delays from Boeing, the latest airline to face growth challenges because of the plane-maker’s safety crisis.

United expects to receive just 61 new narrow-body planes this year, down from 101 it said it had expected at the beginning of the year and contracts for as many as 183 planes in 2024.

“We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,” CEO Scott Kirby said in an earnings release. “And, we’ll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”

United said it plans to lease 35 Airbus A321neos in 2026 and 2027, turning to Boeing’s rival for new planes as the U.S. manufacturer faces caps on its production and increased federal scrutiny. In January, United said it was taking Boeing’s not-yet-certified Max 10 out of its fleet plan. The airline said it has converted some Max 10 planes for Max 9s.

It lowered its annual capital expenditure estimate to $6.5 billion from about $9 billion.

United is also facing a Federal Aviation Administration safety review, which has prevented some of its planned growth. A spokeswoman told CNBC earlier this month that the carrier will have to postpone its planned service from Newark, New Jersey, to Faro, Portugal, and service between Tokyo and Cebu, Philippines.

United earlier this month postponed its investor day, which was scheduled for May, “because our entire team is focused on cooperating with the FAA to review our safety protocols and it would simply send the wrong message to our team to have an exciting investor day focused primarily on financial results.”

The airline said it would have reported a profit for the quarter if not for a $200 million hit from the temporary grounding of the Boeing 737 Max 9 in January.

The FAA temporarily grounded those jets after a door plug blew out minutes into an Alaska Airlines flight, sparking a new safety crisis for Boeing and slowing deliveries of its planes to customers including United, Southwest and others.

The airline posted a net loss of $124 million, or a loss of 38 cents a share, in the first quarter compared with a $194 million loss, or 59 cents, a year earlier. Revenue rose nearly 10% in the first quarter compared with the year-earlier period to $12.54 billion, with capacity up more than 9% on the year.

Here’s what United reported in the first quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:

  • Loss per share: 15 cents adjusted vs. a loss of 57 cents expected
  • Revenue: $12.54 billion vs. $12.45 billion expected

The airline expects to post earnings of between $3.75 and $4.25 in the second quarter, ahead of analysts’ estimates of about $3.76 a share. Airlines make the bulk of their profits in the second and third quarters, during peak travel season.

The carrier also reiterated its full-year earnings forecast of between $9 and $11 a share.

United’s shares were up more than 4% in after-hours trading on Tuesday.

United executives will hold a call with analysts at 10:30 a.m. ET on Wednesday.

Don’t miss these exclusives from CNBC PRO



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Ex-Post Office boss regrets ‘missed opportunity’ to halt Horizon scandal

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“On reflection, and I have reflected on this very hard, when I finished being the Horizon programme director [in early 2000] it would have been very beneficial if I had notified both the lawyers and the [investigations team] that Horizon was a new system coming in, and that they should be very cautious about evidence coming out of that system,” he said.



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Sri Lanka’s economic crisis and debt restructuring efforts By Reuters

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COLOMBO (Reuters) – Sri Lanka’s government rejected a proposal from its international bondholders on Tuesday on restructuring the more than $12 billion the country owes to them.

It means a near two-year spell in default will drag on for Sri Lanka and that the country’s next tranche of vital IMF support money could potentially get delayed.

Below is a timeline of the key events in the crisis and the efforts to resolve it:

2021-2022: Sri Lanka’s economy crumbles after years of overspending leaves its foreign exchange reserves critically low and the government unable to pay for essentials, such as fuel and medicine.

The country’s bonds suffer from multiple downgrades by credit rating agencies warning of the increasing risk of default. At the start of 2022 it manages to make a $500 million bond payment but it leaves its foreign exchange reserves precariously low.

MAY, 2022 – Sri Lanka is declared in default after it fails to make a smaller $78 million bond coupon payment.

JULY, 2022 – Public anger drives protesters to storm then-President Gotabaya Rajapaksa’s office and residence. Rajapaksa flees to the Maldives, before moving on to Singapore.

Current President Ranil Wickremesinghe is voted into power by Sri Lankan lawmakers.

MARCH, 2023 – The International Monetary Fund approves a near $3 billion bailout for Sri Lanka after talks with Wickremesinghe’s government and assurances about its plans to repair the country’s finances.

OCTOBER, 2023

Sri Lanka announces an agreement with China’s EXIM (export/import) Bank to delay payments on about $4.2 billion worth of loans the Chinese lender it has extended to the country.

NOVEMBER, 2023

Other creditor nations including India, Japan and France agree to restructure about $5.9 billion in debt.

MARCH, 2024

A group of Sri Lankan officials arrives in London to meet with a number of investment funds that hold its more than $12 billion worth of government bonds. Talks advance to the key “restricted” phase where proposals are discussed privately and those involved agree not to buy or sell any of the debt on the open market.

© Reuters. FILE PHOTO: A general view of the main business district as rain clouds gather above in Colombo, Sri Lanka, November 17, 2020. REUTERS/Dinuka Liyanawatte/File Photo

APRIL, 2024

The government rejects a proposal tabled by the bondholders. The main stumbling blocks are that some the “baseline” assumptions used differ to those of the IMF and that the plan did not include a contingency option for the government in case the economy fails to recover as expected.





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