The
#Ethereum✅ The Ethereum blockchain successfully completed its long-awaited Pectra upgrade on Wednesday, its biggest overhaul since 2022 and an event that is expected to allow the blockchain to become faster and cheaper at processing transactions.
The upgrade, however, appeared unlikely to be enough to provide a significant boost to the previously red-hot crypto’s price, which continues to lag not only bitcoin but other competitors, industry participants said.
“There are no major specific changes in Pectra that will have an impact on ether’s price, but it just shows an ongoing commitment [by the Ethereum community] towards improving the underlying blockchain,” Tim Lowe, strategic advisor at Bitwise Onchain Solutions, said in an interview.
While ether
ETHUSD
+7.79%
is the second-largest cryptocurrency by market capitalization, its performance has been lagging behind its peers. Ether has lost 45.5% year to date, while bitcoin
BTCUSD
+1.75%
has risen 3.6% during the same period, according to Dow Jones Market Data. Meanwhile, solana
SOLUSD
+5.42%
, often seen as a direct competitor to ether, has declined 24% year to date.
There’s more than one reason for ether’s lackluster performance, but one potential explanation, according to industry participants, is that Ethereum is too slow and expensive compared with some competitors such as the Solana blockchain.
Ether bulls once touted Ethereum as being superior to the Bitcoin blockchain, with more capacity to power decentralized applications and smart contracts. Smart contracts are computer programs that automatically execute the terms of an agreement when its terms and conditions are met.
However, that confidence has not been reflected in ether’s price as of late.
The Pectra upgrade
The Pectra upgrade consisted of 11 Ethereum Improvement Proposals, or documents that proposed changes for the blockchain. Such proposals are written by Ethereum community members, usually application or protocol developers, and have to go through a multistage review and feedback process that includes input from proposal editors and approval from the wider community. Any Ethereum community member can apply to become a proposal editor, while the existing editors would eventually decide whether to approve the application.
The Pectra upgrade on Wednesday incorporated the largest number of proposals ever implemented in Ethereum’s history, according to Sam McIngvale, head of product at OP Labs, which supports Optimism, a blockchain built on top of Ethereum.
Moreover, the Pectra upgrade was the most significant overhaul Ethereum has gone through since the Merge in 2022, when the blockchain transitioned to proof-of-stake from proof-of-work, noted Mallesh Pai, senior director of research at blockchain software company Consensys. Proof of work and proof of stake are different mechanisms that blockchains use to verify transactions. For proof-of-work blockchains, miners solve complicated mathematic puzzles to validate transactions, while under the proof-of-stake mechanism, validators lock up their crypto to verify transactions.
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