Ethereum has successfully deployed the pecttra upgrade in Sepolia testnet, which is expected to provide significant innovations to the Ethereum ecosystem and the broader blockchain industry. Based on past upgrade experience, what impact will Pectra upgrade trigger?
Updates on Ethereum Pectra upgrade
On the afternoon of March 5, 2025, Ethereum announced the successful deployment of the Ethereum Pectra upgrade on Sepolia Testnet. Sepolia is the final major testing phase for Pectra before Mainnet goes live and is expected to take place in April.
Ethereum Pectra is considered one of the biggest upgrades in Ethereum history. It combines Prague (improving transaction processing speed) and electra (improving consensus mechanism).
However, the latest deployment is not going well. Tim Beiko, a core developer at the Ethereum Foundation, announced she encountered an error during the update process and worked hard to resolve the issue.
Sepolia event update 📣
We have identified and deployed fixes for the Sepolia deposit contract issue discovered earlier today. This issue is due to Sepolia’s custom license contract, which is different from Mainnet.
All node operators must upgrade their nodes to…
– timbeiko.eth (@timbeiko) March 5, 2025
Now, Ethereum will hold a developer meeting to finalize Pectra’s mainnet release schedule. If everything goes well and the problem is solved, the upgrade will be launched as planned in April.
In addition to major technological advances, the price of ETH also shows positive momentum. Just 24 hours after the activity took place, ETH trading was around $2,215, an increase of nearly 6%.
Despite the strong rebound of ETH after pectra upgraded news, despite macroeconomic factors and Bybit Hack, ETH has had nearly 30%. On the evening of March 4, ETH even fell by $2,000 for the first time since November 2023.
Source: Coingecko
Pectra upgrades and major upgrades in Ethereum in the past
Ethereum’s main upgrades
As Ethereum continues to grow and captures a larger market share, Ethereum’s recommendations for improvement (EIPS) play an increasingly important role in shaping the future of the network. They are designed to enhance all aspects of the Ethereum protocol to ensure the network improves over time. Recommended changes and new features for the common layer (CL) and execution layer (EL) must be thoroughly documented in the Ethereum Improvement Recommendation (EIP).
Throughout the development process, Ethereum reviewed and implemented many EIPs. However, some outstanding EIPs have introduced groundbreaking innovations into the network, including:
- EIP-721: The ERC-721 token standard was introduced, laying the foundation for Ethereum.
- EIP-1559: Redesign the Ethereum fee structure by implementing the basic fee mechanism, improving transaction processing and priorities, and aiming to reduce user fees on the network.
- EIP-3785 – Merger (September 6, 2022): The Ethereum merger, one of the biggest milestones in Ethereum history, marks a complete transition from POW to POS. All smart contracts and transaction data were transferred to the POS network, successfully completing the transformation of Ethereum. Beacon chains are fully integrated into Ethereum’s original blockchain, reducing energy consumption approximately 99.95%.
- EIP-4844 – Dencun (March 2024): A combination of Deneb and Cancun, this upgrade introduces “Proto-DankSharding”, which improves scalability and significantly reduces gas charges for 2 layers (rolling). Therefore, Ethereum 2-tier transactions will be cheaper and faster.
Overview of Pectra Upgrades
Pectra upgrade is a combination of Electra (the name of the consensus layer upgrade) and Prague (the name of the execution layer upgrade). There are two main stages of Pectra upgrade:
- Phase 1 (2025): Focus on upgrades (EIP-7251), wallet experience improvement (EIP-7702), and faster deposit and withdrawal time for validators.
- Phase 2 (Fusaka – 2026): Introducing EVM object format and PEERDAS, enhancing performance and security. The Ethereum node operator needs to update its customers, but the ETH holder needs no action.
Some major improvement suggestions for Pectra upgrades:
- EIP-7251: Verifiers will be able to increase more ETH (from 32 ETH to 2,048 ETH), thereby increasing reward potential. Ethereum will also expand 50% of its spotted space, making transactions and data processing faster and cheaper.
- EIP-7702: Bring account abstraction to users with multiple functions, such as: Upgrading regular crypto wallets (EOA, EG, MetAmask) is more like a smart contract wallet, adding better security and advanced features, providing better security and advanced features, convenient trading with Passkey, convenient transactions such as Passkey, etc.
Overall, Pectra introduces significant improvements to the Ethereum ecosystem, including an enhanced wallet interface, increased validator placement restrictions, and better aggregate performance.
Impact of upgrading to ETH price movement
Most of Ethereum’s past upgrades have had a significant impact on price movements in ETH, depending on the direction of the development team. For example, the merger has put a strong buying pressure on ETH, causing its price to rise. Additionally, the campaign helps bring users back to NFT, GameFI and Ethereum-based NFT, attracting new capital into the ecosystem and having a positive impact on the price transfer of ETH.
On the other hand, Dencun upgrades open up huge potential for Tier 2 development and transactions. Since Dencun, the number of transactions in Tier 2 has increased by 93% after an average of 3 months, 101% after 6 months. The most impressive growth in basic and arbitration was soaring 460% and 144% respectively in the six months since climbing Kane.
However, the upgrade has triggered a major change in the Ethereum economy: the demand for ETH as a transaction fee has decreased, the burn rate of ETH and the value of Ethereum validators has decreased. In addition, there was no obvious trend in the Ethereum ecosystem at that time (such as Gamefi, Airdrop or Meme), resulting in a lower cost of ETH gas and a huge gap between supply sources and ETH combustion. All these shifts have sparked debates about the accumulation of ETH’s value and Ethereum inflation.
Source: Galaxy Research
So with the potential brought by the Pectra upgrade, investors hope the activity will increase the price of ETH again, especially after Bybit Hack lowered the record bybit Hack. However, investors should closely monitor market conditions and develop well-prepared risk management strategies wherever possible.
