After experiencing a 45% price drop in the first quarter, Ethereum (ETH) seems to be quietly preparing for a glamorous comeback. The key to this comeback may lie in the highly anticipated Pectra upgrade. According to the latest news, the Pectra upgrade is expected to complete final testing on May 7, 2025, and officially launch on the mainnet.
The Pectra upgrade is a combination of two improvement packages, Prague and Electra, covering 9 Ethereum Improvement Proposals (EIPs). The implementation of these proposals aims to simplify the onboarding process for new traders while attracting more institutional investors, further solidifying Ethereum's position as the second-largest blockchain in the world.
One of the core goals of the Pectra upgrade is to significantly raise the validator staking cap from 32 ETH to 2048 ETH, thereby reducing the need to run multiple validator nodes. This move not only simplifies the staking process but also brings greater liquidity locking capabilities to Ethereum, and may even facilitate the flow of large funds. If the user experience is significantly improved, and large investors can participate more easily, on-chain activity is expected to increase substantially. Therefore, the price trajectory of Ethereum post-Pectra upgrade will undoubtedly become an important barometer for the cryptocurrency market in the second quarter.
So, what exactly is the Pectra upgrade? Why is it so important?
Pectra is a significant upgrade to the Ethereum blockchain aimed at improving staking efficiency, optimizing user experience, advancing a Rollup-centric scaling roadmap, and further enhancing Ethereum's decentralization features. Prior to this upgrade, Prague primarily focused on improvements to Ethereum's execution layer, while Electra concentrated on upgrades to the consensus layer. This upgrade has been highly anticipated for months, and the launch date of May 7 has drawn attention from the entire cryptocurrency market. If all goes well, this will be the largest update to Ethereum to date.
As of March 2025, the Pectra upgrade includes the following nine EIPs:
• EIP-2537: New precompiles providing over 120-bit security operations, higher security than the existing 80-bit security of BN254 precompiles.
• EIP-2935: Save historical block hashes to support stateless clients.
• EIP-6110: Provide validator deposits on-chain.
• EIP-7002: New mechanism allowing validators to trigger withdrawals and exits through execution layer withdrawal credentials.
• EIP-7251: Raise the maximum staking limit for Ethereum validators from 32 ETH to 2048 ETH.
• EIP-7549: Provide additional data availability for Ethereum layer two (L2).
• EIP-7685: Framework that allows validator smart contracts to perform specific operations.
• EIP-7702: Experience improvements for external account (EOA) users.
• EIP-7742: Decouple the Blob count between the consensus layer and execution layer.
Among them, EIP-6110, EIP-7002, EIP-7251, EIP-7549, and EIP-7742 will be applied to Ethereum's consensus layer; while EIP-2537, EIP-2935, EIP-6110, EIP-7685, EIP-7002, EIP-7702, and EIP-7742 will change Ethereum's execution layer.
The main features of the Pectra upgrade include the following aspects:
More Efficient Staking
Currently, Ethereum limits the staking amount for a single validator to 32 ETH. For large transactions, this limit means that trading entities need to run a large number of validator nodes. However, EIP-7251 in the Pectra upgrade will raise the maximum staking limit for each validator node from 32 ETH to 2048 ETH. Although the minimum staking threshold for validators remains at 32 ETH to ensure that individual staking is not hindered, the increase in the maximum staking limit will allow large validators to consolidate and run fewer nodes, thereby reducing the number of peer-to-peer messages and digital signatures. Additionally, smaller validators can still increase their staking without accumulating in multiples of 32 ETH to run multiple validator nodes.
As of December 2, 2024, Ethereum has over 1.07 million daily active validators. A large number of validators may lead to high computational and bandwidth loads on the network. The Pectra upgrade aims to alleviate this issue by optimizing the staking mechanism.
Optimization of User Experience
The Pectra upgrade includes several EIPs aimed at enhancing the experience for Ethereum users and developers. For example, EIP-7702 will introduce new transaction types that allow multiple operations by the same user to be completed in a single transaction. Additionally, this upgrade will allow accounts to sponsor gas fees for another account, previously referred to as 'gas abstraction.' EIP-7702 also introduces a 'permission downgrade' feature, allowing users to authorize conditional spending, such as authorizing spending of specific types of ERC-20 tokens or 2% of the total balance per day. Furthermore, EIP-2537 introduces new features in zero-knowledge cryptography, while EIP-7002 makes the Ethereum staking pool experience more trustless by introducing mechanisms that trigger validator exits for smart contracts.
Improved Rollup Scaling
The Pectra upgrade builds on the data Blob foundation introduced by Danksharding, significantly reducing gas fees for Ethereum layer two (L2). EIP-7594 will introduce a new protocol called PeerDAS, allowing nodes to download only part of the data to verify the availability of L2 Blob data. This improvement will further enhance Ethereum's scalability and efficiency.
Potential Impact of Pectra Upgrade on ETH Value
In a research report released in October 2024, Galaxy Research Vice President Christine Kim noted that as Ethereum advances its Rollup-centric scaling roadmap, the impact of mainnet (L1) protocol upgrades on ETH value will gradually diminish. She believes that upgrades on layer two (L2) may have the greatest impact on ETH value, as Ethereum's future revenue may primarily be driven by user activity on L2.
From $3 to $4000, and now experiencing a decline, Ethereum's price history as of April 6, 2025, is full of ups and downs (data source: CoinMarketCap). Christine Kim emphasizes: 'Pushing upgrades for user experience, interoperability, decentralization, and security on L2 is more important for Ethereum's value than optimizations and improvements at the base layer.'
Summary
Ethereum's Rollup-centric scaling plans have sparked differing opinions among analysts, and this uncertainty has impacted market valuations over the past year.
However, network upgrades like Danksharding and Pectra demonstrate a high level of planning and effort. As a pillar of decentralized applications (dApps), decentralized finance (DeFi), and the modern cryptocurrency market, Ethereum will undoubtedly benefit from greater efficiency and flexibility. The Pectra upgrade not only holds the potential to enhance user experience and staking efficiency but may also bring new growth momentum for ETH value. Let us wait and see how this upgrade will reshape the future of Ethereum.
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