This is how Ethereum’s Pectra update will ban ETH bears

Ethereum has underperformed recently, especially compared to Bitcoin and Solana. The first US exchange-traded funds for the asset launched last month, and the price of the underlying asset has fallen nearly 30% since then.

However, the upcoming Pectra (Prague-Electra) upgrade scheduled for the first quarter of 2025 could change the bearish outlook for Ethereum.

Big updates for Ethereum

On August 20, DeFi researcher “Ignas” said it was easy to be bearish on Ethereum given its recent performance, but added that unlike previous updates, “Pectra seems to have no FOMO”.

There have been three major updates to Ethereum over the past few years, and each has brought significant improvements, such as the transition to proof-of-stake, enabling network fee burning and the reduction of layer 2 fees.

1/ Easy to be a bear on ETH:

It underperformed SOL and BTC and bearish sentiment dominates the feed.

But there is a catalyst for optimism: Pectra update: 🧵 pic.twitter.com/6oGh8qK7p8

— Ignatius | DeFi (@DefiIgnas) August 20, 2024

However, Pectra has a few gems up its sleeve, including account abstraction. This will allow externally owned accounts to act as smart contract wallets during transactions on a temporary basis.

This will enable features such as batch transactions, sponsorship transaction fees and privilege management, making dApps easier to use.

The validator stake limit will also be increased from 32 ETH to 2,048 ETH. This will enable larger validators, reduce costs and allow smaller validators to benefit from compound rewards.

There will also be a Peer Data Availability Sampling (PeerDAS) feature that will reduce the costs of Layer 2 solutions by allowing nodes to verify the availability of large data without downloading it all.

Finally, radical changes to the Ethereum Virtual Machine (EVM) will make it easier to write and deploy smart contracts, reducing gas costs and improving efficiency for developers.

Overall, the Pectra update could be seen as an important catalyst that will improve the user experience for both developers and end users while making Ethereum more scalable, efficient and user-friendly, which which could increase adoption and bullish sentiment.

Slow and Steady wins the race

Ethereum’s Anthony Sassano suggested that not rushing updates was more important for the network’s long-term prospects.

I’m really glad that the Ethereum core developers aren’t short-sighted and understand that things take time to build and ship.

The rollup-focused roadmap started in earnest in 2020 and is at least a decade-long and very ambitious roadmap

Stay focused on the long haul, brakes 🙏

— sassal.eth/acc 🦇🔊 (@sassal0x) August 20, 2024

There has also been concern that falling gas rates could have a long-term impact on the issuance of Ethereum, which has become inflationary.

However, Coinbase researchers were not worried, noting that Ethereum will be in greater demand for use in other protocols.

“In the long term, we believe that the use of ETH in protocols may become a larger component of ETH demand than transaction fees, which we believe may trend toward zero.”

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