Pectra is the latest upgrade soon to be implemented on Ethereum, and many believe that this upgrade will be the 'ingredient' for ETH's exceptional growth in the future. Let's explore the Pectra upgrade and how it may impact ETH.
What is Pectra?
Pectra is an upgrade that makes Ethereum faster, better scalable, and more user-friendly for users and developers, expected to be deployed from 2025. This upgrade includes Account Abstraction, reducing storage data for validators, and increasing the efficiency of smart contract processing.
This upgrade combines two previous upgrades: Electra (consensus layer) and Prague (execution layer). Six EIPs have been agreed upon for Pectra Devnet 0, focusing on EIP-7251, expected to launch at the end of May 2024.
Six EIPs include: EIP-6110, EIP-7002, EIP-7549, EIP-2537, EIP-3074, and EIP-7251.
The EIPs (proposals) in the Pectra upgrade
According to Ethereum.org, the development team will finalize 10 important EIPs, including:
EIP-2935: Storing the hash of nearby blocks towards stateless execution, improving network performance.
EIP-7251: Increases the maximum staking limit of validators from 32 ETH to 2048 ETH, reducing the number of validators and enhancing network efficiency.
EIP-7002: Allows validators to flexibly withdraw ETH through the execution layer, increasing liquidity and supporting new staking strategies.
EIP-7594: Introduces the PeerDAS mechanism, optimizing Layer 2, reducing costs, and speeding up transactions.
EIP-7692: Upgrades the EVM with EVM Object Format (EOF), improving the speed and efficiency of smart contracts.
EIP-7702: Implements Account Abstraction with features such as gas fee sponsorship, transaction bundling, Passkey, Session Key, recovery capabilities, asset recovery, and seamless cross-chain transactions.
How many phases does the Pectra upgrade consist of?
The Pectra update is divided into two phases to reduce risk:
Phase one (early 2025): Focuses on Account Abstraction and validator upgrades, improving user experience and staking rewards.
Phase two (2026): Implements technical improvements such as EVM Object Format (EOF) and PeerDAS.
The impact of Pectra on Ethereum
The Pectra upgrade brings significant improvements to Ethereum:
User experience: Simplified with Account Abstraction, supporting payments with any token, batch transactions, and customizable security, making interactions with dApps smoother.
Developer experience: The EVM Object Format (EOF) upgrade helps structure code more efficiently, optimizing costs and execution speed of contracts.
Scalability: Laying the foundation for future scaling solutions like Verkle Tree with optimized infrastructure and more efficient transactions.
Security: Enhanced security with advanced verification and validation processes, minimizing risks and network vulnerabilities.
What does it mean for ETH holders?
The Pectra upgrade brings benefits to Ethereum holders through:
Improving experience: Ethereum becomes more accessible and user-friendly.
Enhanced security: Better protection for user assets and data.
Improved efficiency: Reduced gas fees thanks to optimized transactions and smart contracts.
Preparing for the future: Laying the groundwork for scalability and long-term cost reduction.
Does the Pectra upgrade affect ETH price?
The impact of Pectra on ETH price is unclear, dependent on the achievement of goals and market reactions.
However, Pectra is a significant step forward, enhancing the user experience, development tools, and network infrastructure, while preparing Ethereum for scalability upgrades and improving the safety and friendliness of the environment.
If compared to previous significant upgrades, if the Pectra upgrade proceeds smoothly and achieves its set goals, it is highly likely that the ETH price will increase significantly after this information.