Ethereum has had a tough year, but the Pectra upgrade might change things. In this article, we discuss what this upgrade is and how it could impact Ethereum's price.
Dividing the Pectra Upgrade
One of Ethereum’s main issues has been more efficient blockchains. Pectra aims to change that by increasing the network's efficiency and scalability. Developers are considering splitting the upgrade, with the first phase expected as early as February 2025. This was discussed at an executive meeting held on September 12th. Researcher Ansgar Dietrich also noted that this must be delivered quickly, and if nothing happens by June 2025, it could be considered a failure. Splitting the upgrade is deemed a sensible move, as smaller forks present a reduced risk.
What is Pectra?
Pectra consists of two separate upgrades: the Prague update and the Electra upgrade. The first relates to the execution layer, while the latter impacts the consensus layer. These will work to improve the blockchain's speed. Set to go live in the first quarter of 2025, these updates will come with improved features to make Ethereum more usable. This follows the March 2024 Dencun upgrade aimed at lowering transaction fees for layer-2 solutions. Another feature of the upgrade is the Ethereum Improvement Proposal, which will allow crypto wallets to function using smart contracts. Users will be able to bundle transactions together and then sign them off as a group.
Could Pectra Turn Around Ethereum’s Year?
Network researcher Christine Kim stated that this could be the largest upgrade in Ethereum’s history. This sentiment is shared by others. The announcement of the Ethereum Improvement Proposal in April 2024 also provided hope to Ethereum investors. Ethereum has undergone major upgrades before. One such upgrade occurred in 2022, known as The Merge. This changed the consensus mechanism from proof of work to proof of stake, significantly boosting Ethereum's value. One of the most important outcomes was a 99.95% reduction in energy consumption, making Ethereum an eco-friendly alternative to other cryptocurrencies. Additionally, the upgrade increased transaction processing speed from 15 to 1,000 per second, and transaction fees dropped from $50-100 per hour to $2-5 per transaction.
Ethereum has had a wild year, but the Pectra upgrade could change things. With the current low price and upcoming network improvements, this could be a turning point for Ethereum.
Comments