We are now in the final stretch of February and, consequently, the final stretch of the first quarter of the year. And, with that, the expectation for the launch of the Pectra update, which is scheduled for this quarter, increases.
Naturally, this is expected to have some impact on this crypto.
Below is a breakdown of what the update will bring and the expected impacts:
Pectra is a combination of two main Improvement Proposals (EIPs):
EIP-3074: Focuses on improvements to external accounts (EOAs), allowing users to delegate transactions to smart contracts, which can simplify operations such as batch payments and wallet recovery.
EIP-7251: Known as “Increase Max Effective Balance,” it increases the staking limit for validators, allowing them to stake more than 32 ETH. This could incentivize large stakers to participate and improve network efficiency.
Additionally, Pectra may include other technical improvements to optimize network performance and security.
Expected impacts on cryptocurrency
Improved user experience:
EIP-3074 can make transactions more efficient and cheaper, especially for users who perform complex or frequent transactions.
Simplifying operations such as wallet recovery can attract more users to the network.
Staking incentive:
With EIP-7251, validators will be able to stake more ETH, which can increase network security and attract more participants to staking.
This could also reduce the amount of ETH in circulation, potentially positively impacting the price of ETH in the long term.
Preparing for future updates:
Pectra is another step in Ethereum’s long-term roadmap, which includes continued improvements to scalability, security, and usability.
It helps prepare the network for future upgrades, such as the full implementation of Danksharding, which aims to improve layer 2 scalability.
Impact on ETH price:
Successful upgrades often generate market optimism, which can lead to an increase in the price of ETH.
The potential reduction in the circulating supply of ETH due to increased staking could also contribute to appreciation.
The Pectra upgrade represents another important step in Ethereum’s ongoing development, focused on improving the network’s usability, security, and efficiency. If successfully implemented, it could strengthen Ethereum’s position as the leading blockchain for smart contracts and decentralized applications, as well as positively impact the price of ETH. The community is eagerly awaiting more details and an official launch in 2024.
Please note: This article is for informational purposes only and does not constitute financial advice, investment recommendations, or a solicitation to buy, sell, or hold cryptocurrencies. The author is not responsible for any investment decisions made based on the information presented here.
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