What changes will occur in Ethereum after the Pectra upgrade goes live?

Author: Aleks Gilbert Source: DLNews Translation: Shan Ouba, Golden Finance

An important Ethereum upgrade called Pectra officially went live on Wednesday. Pectra brings improvements in user experience, Layer 2 blockchains, and validators. "This marks the point where Ethereum finally begins to function like a modern network," said a contributor from Optimism.

The largest upgrade to date for Ethereum went live on Wednesday morning, simplifying the previously cumbersome user experience - one of the key factors that has hindered mass adoption for a long time. This upgrade, called Pectra, was activated just after 10 AM London time on Wednesday. The annual upgrade cycle of Ethereum has brought many significant changes over the past few years.

In 2022, an upgrade called "The Merge" completely changed Ethereum's consensus mechanism, reducing its energy consumption by about 99%.

This change is achieved by altering the way Ethereum validates transactions and adds them to the ledger—it abandons the initially Bitcoin-like method in favor of a proof-of-stake (staking) mechanism, where users lock ETH to secure the network, thereby earning a certain reward annually.

In 2023, Ethereum developers enabled the withdrawal function for staked ETH, unlocking billions of dollars in locked capital. In 2024, the usage costs of Layer 2 blockchains were reduced by up to 98%.

In this Pectra upgrade, the developers have chosen a series of smaller but diverse improvements. These changes significantly enhance the functionality of the digital wallet, making it easier for users to interact with applications such as decentralized exchanges and lending protocols within the Ethereum ecosystem.

In addition, it has increased the capacity of Layer 2 blockchains—ensuring that during peak usage, the fees on these chains remain affordable—and improved the efficiency of validators, i.e., those computers that process transactions and add new blocks to the Ethereum chain.

"This marks the fact that Ethereum has finally begun to function like a modern network," wrote Binji, a pseudonymous contributor from Optimism, on X. "Pectra reduces the number of clicks you need to complete an operation."

What does Pectra include?

Users can now submit transactions in bulk, skipping the endless pop-ups that require confirmation for pending transactions.

Users can also pay transaction fees with any token. Previously, transaction fees had to be paid using the native Ethereum token Ether. In the future, using tokens that are pegged to real-world currencies to pay transaction fees will allow users to better understand the actual cost of each transaction.

"The 'merger' changed the way the protocol works," Binji wrote, "while Pectra changed the user experience of Ethereum."

Pectra is also built on the foundation of last year's "Dencun" upgrade.

The upgrade introduced "blob" - a new type of data storage that Layer 2 blockchains can use to submit compressed transaction data.

It further compresses the Layer 2 transaction fees, which are already much cheaper than those on the Ethereum main chain, to the level of "a few cents."

But Layer 2 blockchains quickly became congested again, with dynamic transaction fees fluctuating based on network activity, occasionally even bouncing back to levels seen before Dencun.

Pectra doubles the number of blobs that Ethereum can handle, which is expected to keep Layer 2 transaction fees within a relatively acceptable range - at least for now.

During a developer conference call in January this year, Jesse Pollak, the chief developer of Coinbase's Layer 2 blockchain Base, stated that he expects future user demand to exceed the update pace of Ethereum itself. His colleagues anticipate that by 2025, demand will grow by 10 to 20 times, far exceeding the capacity added by Pectra.

Finally, Pectra allows validators to consolidate their staked capital – previously, each 32 ETH needed to be managed separately, but now up to 2048 ETH can be managed at once. For node operators, this means lower management overhead.

Pectra is Ethereum's moment to reclaim itself, not just for risk resistance, and not just for expansion, but for the users.

The Pain of Prices

However, this upgrade has not resolved a core issue surrounding Ethereum: its cryptocurrency has long underperformed compared to Bitcoin and Solana.

Ethereum Foundation researcher Justin Drake stated in February this year that ETH has not fulfilled its promise as a "super currency." Its supply was supposed to decrease, and its value was supposed to rise.

Even after the election of the "crypto president" Trump in the United States, both Bitcoin and Solana reached historical highs, while the price of ETH only reached $4000 in December last year, far below its historical high of $4800 in 2021.

In the market turmoil caused by Trump's new tariff policy last month, ETH fell faster than other major crypto assets, reaching a two-year low, just above $1400.

Critics have vehemently attacked developers for focusing on building cheaper and faster Layer 2 blockchains as a path to drive mass adoption, arguing that these blockchains consume very little ETH in transactions, which fundamentally undermines the expected logic of "supply constantly decreasing and prices constantly rising."

Since the personnel changes at the Ethereum Foundation, the situation has changed. This is a well-funded Swiss non-profit organization that has been financing the ongoing development of Ethereum.

The new leadership stated that they plan to refocus on reducing the usage costs of the Ethereum main chain and improving performance, rather than solely shifting the burden of "making it cheaper" onto Layer 2 developers.

Fusaka

The leaders of the Ethereum Foundation have not clearly indicated when these changes (referring to a greater focus on the performance of the main chain) will arrive or what they will specifically include. Meanwhile, Ethereum's next major upgrade, codenamed Fusaka, is expected to go live in the second half of this year.

The developers stated that Fusaka will further enhance the decentralization of Ethereum.

Currently, every node computer in the Ethereum network must download all data of the entire blob when processing blob data submitted by Layer 2 blockchains.

After the Fusaka upgrade, each computer only needs to download part of the blob data and then verify the correctness of the data downloaded by other nodes through encryption methods.

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