Ethereum Hits $3,800 for First Time Since December 2021

At time of publication, the Ethereum price had dipped slightly, trading at $3,796.53, up 2.8% on the day, according to CoinGecko data. The last time the cryptocurrency price rose above $3,800 was December 29, 2021, according to the price tracking site.

The rapid increase in the price of the cryptocurrency occurred against the backdrop of the fact that at the beginning of this week, the capitalization of Ethereum reached more than $116 billion, that is, 9% more than since the beginning of the year. According to statistics from beaconcha.in, there are currently 31,320,207 ETH in circulation, which in terms of the current ETH price is more than $119 billion.

Ethereum's growth is also fueled by the anticipation of the Dencun system update, which is scheduled to take place on March 13, when Dencun will be launched on the main network. Dencun will implement proto-danksharding in Ethereum, a mechanism designed to reduce transaction costs for second-layer blockchains, aimed at solving problems associated with scaling.

Once fully implemented, Dencun is expected to enable Ethereum to cheaply process over 100,000 transactions per second. According to Terence Cao, a developer at Offchain Labs, which is creating Arbitrum, due to the implementation of Dencun, the cost of gas in second-level networks will decrease by 75%, which will potentially provide an opportunity for cryptocurrency companies to cover users' gas costs in second-level networks.

Dencun is also implementing "blocks" that temporarily store transaction data off-chain to minimize the cost of storing and processing data on Ethereum. “We will be able to process data much more efficiently and cheaper,” Ethereum core developer Mario Havel told Decrypt last year.

With the Dencun update comes another innovation - EIP-7044, an Ethereum improvement project that allows ETH validators and stakers to store instructions on when to exit their active position. This means that validators will be able to automatically exit their position if their node becomes inactive, thus avoiding penalties for not completing transactions.