Key points
Ethereum's Pectra upgrade, scheduled for 2025, is expected to make the Ethereum network faster, more scalable, and easier to use.
Major changes include enabling gas fee payments with different tokens, increasing the speed of smart contracts, and improving staking rewards for validators.
Long-term benefits include better scalability and lower costs, with features like Verkle Trees and PeerDAS contributing to Ethereum’s growth and usability.
What is Ethereum's Pectra upgrade?
Ethereum’s Pectra hard fork aims to make Ethereum faster, more scalable, and easier to use for both regular users and blockchain developers. Expected to launch in two phases starting in 2025, Pectra is set to be one of the most significant improvements to the Ethereum network in recent years.
Pectra is actually the merging of two updates that were initially planned to happen separately: Prague and Electra. They were combined to make the process easier.
Why is Ethereum implementing updates?
Ethereum has been constantly implementing improvements since its inception, with many major updates like “The Merge” in 2022 (which changed Ethereum to Proof of Stake
However, Ethereum still faces challenges, especially regarding transaction fees, scalability, and its complexity for new users. The Pectra upgrade is designed to address these issues.
Pectra Update Key Features
Let’s look at some of the major changes coming with the Pectra update:
1. Account abstraction
Currently, Ethereum users need to hold small amounts of Ether (ETH) in their wallets to pay for gas fees. Gas fees are costs that must be paid whenever you make a transfer or interact with a decentralized application (DApp). For example, if you are sending tokens to someone or trading NFTs, you need to use ETH to cover these costs.
With the Pectra upgrade, Ethereum will leverage a concept called account abstraction to improve the user experience. One benefit of account abstraction is that you will no longer need to hold a balance in ETH just to pay for gas fees. Instead, you will be able to pay for fees with other tokens, such as USDC or DAI, which makes the process more convenient. The upgrade will also allow third-party services to sponsor your gas fees, meaning you may pay very low or no fees in some cases.
2. Efficiency of smart contracts
Through Ethereum Improvement Proposals (EIPs) like EIP-7692, the Ethereum Virtual Machine (EVM) will become more efficient, speeding up the execution of smart contracts. This change benefits both developers and users by reducing the cost and complexity of deploying smart contracts.
3. Improvements to validators
You’ve probably heard that Ethereum runs on a decentralized system where “validators” help confirm transactions and keep the network secure. Validators need to stake (lock) 32 ETH to participate and earn rewards in return. But any ETH above 32 sits idle and doesn’t generate any extra rewards. This isn’t very efficient.
Pectra will introduce flexible staking withdrawals (EIP-7002) and increase the validator staking limit from 32 to 2048 ETH (EIP-7251). This change will make the system more flexible and efficient, especially for individuals or companies managing large amounts of ETH.
Additionally, Pectra will enable “validator consolidation,” meaning large operations like Lido that stake ETH for many users will need to run fewer validator nodes. This reduces the pressure on the Ethereum network, making it faster and less resource-intensive.
4. Verkle Trees for Better Data Management
One of the technical improvements Pectra is the introduction of Verkle Trees, which will allow nodes to store less blockchain data. This may sound complicated, but it is an upgrade that will make the Ethereum network faster and more scalable by improving the way data is stored and verified.
In other words, Verkle trees are a new way of organizing data that is more efficient than Ethereum’s current model. They help reduce the amount of storage required and speed up transaction processing. This means that Ethereum will likely become faster and cheaper to use in the long run.
5. Layer-2 and PeerDAS Solutions
Ethereum's Layer-2 (L2) solutions, such as Arbitrum and Optimism, are designed to handle many transactions outside of the Ethereum mainnet. This helps reduce congestion and transaction costs (gas fees).
Pectra will enhance these L2 solutions by introducing Peer Data Availability Sampling (PeerDAS), a technology that makes it easier to manage data for these L2 networks. Essentially, PeerDAS will help make Layer-2 even cheaper and faster, which is great news for anyone who uses Ethereum-based applications or transacts a lot.
Why will the Pectra update be split into two parts?
Ethereum’s Pectra upgrade was originally going to happen in one step, but Ethereum developers realized that trying to implement everything at once would be too complex and risky. So they decided to split the upgrade into two parts.
First phase (early 2025): The first phase will focus on immediate improvements such as account abstraction and validator upgrades. These changes will make Ethereum easier to use and improve staking rewards.
Part 2 (expected in 2026): Part 2 will bring more technical improvements, such as the EVM Object Format (EOF), which will make smart contracts more efficient, and PeerDAS, which will increase the scalability of Layer-2.
How Will Ethereum’s Pectra Upgrade Affect You?
Regular users: One of the biggest benefits is that you will no longer need to hold ETH just to pay gas fees. You will be able to use other tokens to cover fees, making it easier to interact with services and DApps on Ethereum. Additionally, improvements to the way validators operate should make the network faster and more secure.
Validators and Stakers: If you stake ETH or run a validator node, the update will allow you to manage larger amounts of ETH more efficiently. You’ll earn rewards on anything above 32 ETH, which wasn’t possible before. The consolidation of validators will also make it easier to manage your staking operations and reduce pressure on the Ethereum network.
Developers: Pectra brings improvements to the Ethereum Virtual Machine (EVM), the environment that executes smart contracts. These changes will make writing and deploying smart contracts easier, faster and cheaper, which is great for developers building decentralized applications.
Long-Term Benefits of Ethereum Pectra
While some improvements will be noticeable immediately, the Pectra upgrade is focused on preparing Ethereum for long-term growth. By increasing network scalability and efficiency, Pectra is helping prepare Ethereum for the future, when even more people and businesses will use it.
With the introduction of Verkle Trees and improvements to Layer-2 solutions, Ethereum will be able to handle more transactions at lower costs, which is essential as the network continues to grow.
Final considerations
The Pectra upgrade is a major step forward in making Ethereum faster, cheaper, and easier to use. By splitting the upgrade into two parts, the developers are ensuring that each phase delivers significant improvements without overloading the network. Whether you’re a regular user, a validator, or a developer, the Pectra upgrade will bring new features that will improve your Ethereum experience.
Further reading
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