The largest upgrade to Ethereum so far went live on Wednesday morning, streamlining the blockchain's cumbersome user experience, which has long been seen as a barrier to its widespread adoption.
The upgrade named Pectra was officially launched just after 10 AM London time on Wednesday.
In recent years, Ethereum's annual upgrade cycle has brought significant changes.
In 2022, a significant upgrade called 'The Merge' changed Ethereum's consensus mechanism, expected to reduce the blockchain's energy consumption by 99%.
It achieved this by changing how Ethereum approves transactions and adds them to the chain, replacing the original Bitcoin-like method with another called 'staking.' In the staking mechanism, users lock up 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 reduced the costs of using affiliated Layer 2 blockchains by 98%.
In Pectra, developers chose a series of small-scale improvements. These enhancements significantly increased the capabilities of the digital wallets needed to interact with Ethereum-based applications (such as decentralized exchanges and lending protocols).
They also enhanced the capacity of the Layer 2 blockchains—ensuring that even during peak usage, these blockchains' fees remain relatively affordable—as well as the efficiency of validators (computers responsible for processing transactions and adding new blocks to the Ethereum chain).
Anonymous Optimism contributor Binji wrote on X: "It is from here that Ethereum starts to feel like a modern network. Pectra reduces the number of clicks required to execute operations."
What features does Pectra have?
Users can now batch transactions and skip the seemingly endless pop-ups requesting approval for pending transactions on Ethereum.
Users can also pay transaction fees with any token. Previously, fees had to be paid using Ethereum's cryptocurrency, Ether. Paying with tokens pegged to real-world currencies will better inform users of the true cost of each transaction.
"The merger changed how the protocol operates," wrote Binji. "Pectra changes the Ethereum experience."
Pectra is also built on last year's upgrade version Dencun.
The upgrade introduced blobs, a form of data storage that second layer blockchains can use to submit compressed transaction data to Ethereum.
This brought the transaction costs on the second layer blockchain (already much cheaper than Ethereum itself) down to a few cents.
But the second layer blockchain quickly became congested, and its dynamic transaction fees (which fluctuate based on activity) occasionally spiked to levels seen before Dencun.
By doubling the number of blobs Ethereum can handle, Pectra aims to keep transaction fees on Layer 2 blockchains at relatively affordable levels—at least for now.
In a developer call in January, Coinbase Layer 2 blockchain Base's chief developer Jesse Pollak stated that he expects usage to outpace Ethereum's update speed.
He said his colleagues predict that demand will grow 10 to 20 times by 2025, far exceeding the new capacity added by 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," wrote Binji. "Not just for resilience. Not just for scaling. But for users."
Price pain
However, this does not address a key complaint about Ethereum: the performance of its cryptocurrency lags behind major competitors like Bitcoin and Solana.
Ethereum Foundation researcher Justin Drake stated in February that Ethereum has failed to achieve its status as 'ultrasound money.' Its supply was supposed to decrease, while its value was expected to rise.
Even after 'crypto president' Donald Trump's election as U.S. president, Bitcoin and Solana prices reached all-time highs, while Ethereum also peaked at $4,000 in December, far below the $4,800 all-time high set in 2021.
Last month, Trump's tariff policies caused market turmoil, with Ethereum's decline exceeding that of other major cryptocurrencies, dropping to a two-year low, just above $1,400.
Critics slam developers for focusing their efforts on building cheaper and faster Layer 2 blockchains on top of Ethereum as a path to mass adoption, arguing that these blockchains consume too little Ethereum in transaction fees, leading to a failure to fulfill the promise of a continuously decreasing supply—with prices steadily rising.
Since the reorganization of the Ethereum Foundation (a well-funded Swiss non-profit organization dedicated to the ongoing development of blockchain), things have changed.
The new leadership stated that they intend to focus on improving Ethereum's price and performance, rather than merely outsourcing price drivers to Layer 2 developers.
Fusaka
Ethereum Foundation leaders have not revealed when these changes will come or what they may bring. Meanwhile, Ethereum's next major upgrade, Fusaka, is expected to launch in the second half of this year.
Developers say that Fusaka will enhance the decentralization of the blockchain.
Every computer that makes up the distributed Ethereum network must download all the data from 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 cryptographic techniques 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.
