basic ideas
The Ethereum Pectra upgrade, which will launch in 2025, is set to make the Ethereum network faster, more scalable, and easier to use.
Key changes include allowing users to pay transaction fees on the network with different tokens, speeding up smart contracts, and improving staking rewards for validators.
Long-term benefits include better scalability and lower costs, with features like Verkle Tree and PeerDAS supporting the growth and ease of use of the Ethereum network.
What is the Pectra upgrade for the Ethereum network?
The Ethereum Pectra upgrade (chain split) is an upgrade that aims to make the Ethereum network faster, more scalable, and easier to use, for both regular users and blockchain developers. The Ethereum Pectra upgrade is expected to launch in two phases starting in 2025, and is expected to be one of the most significant improvements to the Ethereum network in recent years.
The Pectra upgrade is actually two upgrades that were planned separately: Prague and Electra, and then combined into one to make things smoother.
Why is Ethereum being upgraded?
The Ethereum network has been improving steadily since its inception, with several important upgrades such as the “merge” in 2022 (which switched Ethereum to a proof-of-stake model) and the “Cancun” upgrade in 2024.
However, the Ethereum network still faces some challenges, especially regarding transaction fees, scalability, and complexity for new users, and the Pectra upgrade is designed to address these issues.
Main Features of Pectra Upgrade
Below we'll cover some of the biggest changes the Pectra upgrade will bring:
1. Account abstraction
Currently, Ethereum users need to have small amounts of Ether (ETH) in their wallets to pay transaction fees on the network. These fees are transaction costs that you have to pay whenever you make a transfer or interact with a decentralized application. For example, if you’re sending tokens to someone or trading NFTs, you’ll need to use ETH to cover these costs.
With the Pectra upgrade, Ethereum will use a concept called account abstraction to improve the user experience. One of the benefits of account abstraction is that you won’t have to hold just ETH to pay transaction fees on the network. Instead, you can pay with other tokens, such as USDC or DAI, making it easier to use the network. The update will also allow third-party services to take care of transaction fees on the network for you, meaning you can pay little or no fees in some cases.
2. Efficiency of smart contracts
Through Ethereum improvement proposals like EIP-7692, the Ethereum Virtual Machine (EVM) will become more efficient, leading to faster execution of smart contracts. This change benefits both developers and users by reducing the cost and complexity of deploying smart contracts.
3. Improvements for auditors
You may have heard that Ethereum operates on a decentralized system where “validators” help confirm transactions and keep the network secure. Validators need to stake (hold) 32 ETH to participate, and then earn rewards in return. But anything over 32 ETH just sits there without earning any additional rewards, which is not efficient.
The Pectra upgrade will introduce flexible withdrawals of staked coins (EIP-7002) and increase the stake limit for validators from 32 ETH to 2048 ETH (EIP-7251). This change will make the system more flexible and efficient, especially for individuals or companies that manage large amounts of ETH.
Additionally, Pectra will enable “validator consolidation,” meaning that large operations like Lido, which store ETH for many users, will need to run fewer validator nodes, which should reduce the strain on the Ethereum network, making it faster and less resource-intensive.
4. Verkle Tree for Better Data Management
Among the technical improvements that the Pectra upgrade will introduce is the introduction of the Verkle tree, which will allow nodes to store less data on the blockchain. This may sound complicated, but it’s an upgrade that will make the Ethereum network faster and more scalable by improving how data is stored and verified.
In other words, the Verkle tree is a new way of organizing data that is more efficient than what Ethereum currently uses, and it helps reduce the amount of storage required and speed up transaction processing. This means that the Ethereum network will likely become faster and cheaper to use in the long run.
5. Layer 2 and PeerDAS Solutions
Ethereum layer 2 solutions, such as Arbitrum and Optimism, are designed to handle many transactions outside of the Ethereum main network. This helps reduce congestion and lower transaction costs (transfer fees on the network).
The Pectra upgrade will improve layer 2 solutions by introducing Peer Data Availability Modeling (PeerDAS), a technology that makes data processing easier for layer 2 networks. PeerDAS will essentially help make layer 2 solutions cheaper and faster, which are great features for anyone using Ethereum-based applications or executing a lot of transactions.
Why is the Pectra upgrade divided into two stages?
The Ethereum Pectra upgrade was supposed to happen all at once, but Ethereum developers realized that trying to implement the entire upgrade at once would be a complex and risky process. So, they decided to split the upgrade into two parts.
Part 1 (early 2025): The first phase will focus on immediate improvements such as account abstraction and validator upgrades. These changes will make the Ethereum network easier to use and increase staking rewards.
Part 2 (expected in 2026): Part 2 will include further technical improvements, such as the Ethereum Virtual Machine (EVM) element coordination, which will make smart contracts more efficient, and PeerDAS technology, which will revolutionize layer 2 scalability.
How will the Ethereum Pectra upgrade affect users?
Regular users: One of the biggest benefits of the upgrade is that you will no longer need to own ETH just to pay transaction fees on the network, and you will be able to use other tokens to cover fees, making it easier to interact with decentralized applications and services on the Ethereum network. Additionally, improvements to how validators work should make the network faster and more secure.
Validators and Staking: If you store ETH or run an auditor node, the upgrade will allow you to manage larger amounts of ETH more efficiently. You will earn rewards on any amount over 32 ETH, a feature that wasn’t available before. The integration of validators will make it easier to manage staking and reduce the strain on the Ethereum network.
Developers: The Pectra upgrade makes improvements to the Ethereum Virtual Machine (EVM), the environment that runs smart contracts. These changes will make writing and deploying smart contracts faster and less expensive, which is a great feature for developers building decentralized applications.
Long-Term Benefits of Ethereum Pectra Upgrade
While some of the improvements will be noticeable right away, the Pectra upgrade is all about paving the way for the long-term growth of the Ethereum network. By making the network more scalable and efficient, the Pectra upgrade helps prepare Ethereum for the future, when more people and businesses will embrace it.
The introduction of the Verkle tree and improvements to layer 2 solutions also means that Ethereum will be able to handle more transactions at lower costs, which is essential as the network continues to grow.
Closing thoughts
The Ethereum Pectra upgrade is a huge step towards making the Ethereum network faster, cheaper, and easier to use. By splitting the upgrade into two parts, developers ensure that each phase brings clear and meaningful improvements without overloading the network. Whether you’re a regular user, a validator, or a developer, the Pectra upgrade is designed to add new features that will enhance your experience on the Ethereum network.
Related Articles
What is the Cancun upgrade for the Ethereum network?
The Merge Ethereum Upgrade: Everything You Need to Know
What is Ethereum 2.0 and why is it important?
Disclaimer: This content is provided to you “as is” for general informational and educational purposes only, without any representations or warranties of any kind. It should not be construed as financial, legal, or professional advice, nor is it intended as a recommendation for the purchase of any particular product or service. You should seek professional advice from professional advisors. If this article is provided by a third party, please note that the opinions expressed are those of the third party and do not necessarily reflect the views of Binance Academy. Please see the full disclaimer here for more details. Cryptocurrency prices are subject to price fluctuations, and the value of your investment may go up or down, and you may not get back the amount you invested. You are solely responsible for your investment decisions, and Binance Academy is not responsible for any losses you may incur. This article should not be construed as financial, legal, or professional advice. For more information, please see the Terms of Use and Risk Warning
