What changes will occur in Ethereum after the Pectra upgrade?

Author: Aleks Gilbert, DL News; Translated by: Deng Tong, Jinse Finance

Summary

• An important upgrade to Ethereum - Pectra - officially went live on Wednesday.
• Pectra has brought improvements to user experience, layer two blockchain, and validators.
• “From now on, Ethereum is starting to feel like a modern network,” said a writer from Optimism.

The largest upgrade to Ethereum to date went live on Wednesday morning, simplifying the clunky user experience of the blockchain, which has long been seen as a barrier to its widespread adoption.

The upgrade named Pectra officially went live just after 10 AM London time on Wednesday.

In the past few years, Ethereum’s annual upgrade cycle has brought significant changes.

In 2022, a major upgrade called “The Merge” changed Ethereum’s consensus mechanism, expected to reduce the blockchain’s energy consumption by 99%.

It achieves this goal by changing the way Ethereum approves transactions and adds them to the chain, replacing the original Bitcoin-like method with another mechanism called “staking.” In the staking mechanism, users lock their Ethereum in exchange for a small annual reward, thereby securing the network.

In 2023, Ethereum developers implemented the withdrawal of staked Ethereum, releasing billions of dollars in locked funds. In 2024, they will reduce costs using associated Layer 2 blockchains by 98%.

In Pectra, developers have chosen a series of small-scale improvements. These enhancements significantly enhance the functionality of digital wallets required to interact with Ethereum-based applications, such as decentralized exchanges and lending protocols.

They have also increased the capacity of Layer 2 blockchains—ensuring that even during peak usage, the fees for these blockchains remain relatively affordable—and the efficiency of validators (the computers responsible for processing transactions and adding new blocks to the Ethereum chain).

Anonymous Optimism contributor Binji wrote on X: “This is where Ethereum starts to feel like a modern network. Pectra reduces the number of clicks needed to execute operations.”

What functions does Pectra have?

Users can now process transactions in bulk and skip the seemingly endless pop-up requests for approval of pending transactions on Ethereum.

Users can also pay transaction fees using any token. Previously, fees had to be paid using Ethereum’s cryptocurrency, Ether. Paying with tokens pegged to real-world currencies will give users a better understanding of the actual cost of each transaction.

“The merger changed the way the protocol operates,” wrote Binji. “Pectra changed the Ethereum experience.”

Pectra is also built on last year’s upgraded version Dencun.

This upgrade introduces blobs, a form of data storage that second-layer blockchains can use to submit compressed transaction data to Ethereum.

This reduces the transaction costs on the second-layer blockchain (which are already much cheaper than Ethereum itself) to just a few cents.

However, the second-layer blockchain quickly became congested, and its dynamic transaction fees (which fluctuate based on activity) occasionally soared to levels seen before Dencun.

By doubling the number of blobs that Ethereum can handle, Pectra is expected to keep transaction fees on Layer 2 blockchains at relatively affordable levels—at least for now.

During a developer conference call in January, Jesse Pollak, the chief developer of Coinbase’s Layer 2 blockchain Base, stated that he expects the usage rate to surpass the update speed of Ethereum.

He said that his colleagues predict that by 2025, demand will grow by 10 to 20 times, far exceeding the additional capacity of Pectra.

“Currently, we do not have the capability to meet this demand.”

Finally, Pectra will allow validators to consolidate their staked funds, which previously had to be managed in batches of 32 ETH. Now, validators can manage up to 2,048 ETH at once. This means lower operational costs for operators.

“Pectra reminds Ethereum of its mission,” Binji wrote. “Not just for resilience. Not just for scalability. But for the users.”

The Pain of Price

But this does not address a key complaint people have about Ethereum: its cryptocurrency performs worse than major competitors like Bitcoin and Solana.

Ethereum Foundation researcher Justin Drake stated in February that Ethereum has failed to achieve its “ultrasound money” status. Its supply was supposed to decrease, while its value was supposed to increase.

Even after “Cryptocurrency President” Donald Trump was elected President of the United States, the prices of Bitcoin and Solana reached historic highs, while Ethereum peaked at $4,000 in December, significantly lower than the historic high of $4,800 set in 2021.

Last month, Trump’s tariff policy caused turmoil in the market, with Ethereum’s decline surpassing that of other major cryptocurrencies, dropping to its lowest point in two years, slightly above $1,400.

Critics have slammed developers for focusing their efforts on building cheaper and faster Layer 2 blockchains on top of Ethereum as a means to achieve mass adoption. They argue that these blockchains consume too little Ethereum in the form of transaction fees, leading to a continuous reduction in supply—resulting in unmet promises of rising prices.

Since the restructuring of the Ethereum Foundation (a well-funded Swiss non-profit organization dedicated to promoting the ongoing development of blockchain), the situation has changed.

The new leadership stated that they intend to focus on improving the price and performance of Ethereum, rather than merely outsourcing the price drivers to Layer 2 developers.

Fusaka

The leaders of the Ethereum Foundation have not disclosed when these changes will come or what changes they may bring. Meanwhile, Ethereum’s next major upgrade, Fusaka, is expected to be launched in the second half of this year.

Developers say that Fusaka will enhance the level of decentralization in blockchain.

Every computer that makes up the Ethereum distributed network must download all the data in each new blob submitted by the Layer 2 blockchain.

After the Fusaka upgrade, these computers only need to download a portion of each blob, while using encryption technology to verify the accuracy of the remaining information downloaded by other computers in the network.

According to Ethereum independent researcher Christine Kim, this will significantly enhance the blockchain’s ability to process blobs.