Pectra is coming: what Ethereum’s biggest upgrade means for $ETH?
$ETH dropped below $2,000, while Pectra — one of Ethereum’s biggest and most anticipated upgrades is on the horizon.
What is Pectra, why was it delayed, and how will it impact $ETH?
A longread 🧵
1. What is Pectra?
Since the Merge in 2022, which transitioned Ethereum from PoW to PoS, Pectra is the third major upgrade. It combines two planned upgrades in Ethereum roadmap — Prague and Electra — making it so big and highly anticipated.
What will it bring:
- Account Abstraction
- Verkle Tree
- PeerDAS
- More blobs
- Increase staking limit
Let’s go deeper on each point 👇
> Account Abstraction (AA):
One of the most mentioned keywords in crypto in recent years, often seen as the key to mass adoption.
AA focuses on improving UX by removing the hard steps that non-crypto users face, like gas fees, private keys, etc.
This will completely reshape how wallets, smart contracts, and dApps function on Ethereum.
> Verkle Tree
A new data structure that optimizes information storage and verification, simply explained it will make Ethereum processing quicker while remaining security.
> PeerDAS
Or Peer Data Availability Sampling, it improves Ethereum’s scalability by allowing nodes to verify transaction data without storing it entirely.
> More blobs
Doubling L2 blob capacity from 3 to 6, reducing congestion and lowering fees even further.
> Increase staking limit
Up from 32 to 2,048 ETH, making large-scale validator operations more efficient.
This could also hint at preparations for institutional $ETH staking, considering ETH ETFs have raised massive capital.
This upgrade is needed by ETFs because:
• Right now, ETF issuers must manage hundreds of validators to stake large amounts of ETH. With Pectra, they can consolidate stakes into fewer validators, reducing operational complexity.
• Higher yields make it more attractive, potentially driving more deposits into ETFs.
2. How it affect $ETH?
Back in 2022, when The Merge was coming, $ETH had a big rally +90% from bottom, in expecting of $ETH deflationary, as The Merge reduced $ETH issuance.
However, Pectra is all about improving UX.
It doesn’t directly impact $ETH tokenomics, so no short-term pump.
If ETF staking assumption is true, in the short term, increased institutional adoption can positively impact the price, while in the mid to long term, the effect would be neutral. More ETF staking means higher demand for $ETH, but also more staking rewards, increasing supply.
The real effect of Pectra is making Ethereum cheaper and more convenient, potentially even more than Solana. This could drive more activity and capital inflow. In the long run, it strengthens Ethereum’s sustainability and supports $ETH growth versus other chains.
3. Pectra’s Status
Pectra Mainet was scheduled for Mar 2025 (now), but during its activation on Ethereum’s Holesky testnet, a critical flaw was found on Feb 25th. As a result, it’s now delayed.
They launched a new testnet called Hoodi, which focus solely on testing Pectra, and if things go well, Foundation plans it on April 30th.
Will this hurt $ETH? Probably not.
Since Ethereum upgrades failing to finalize on testnet isn’t new, Dencun faced similar issues
In Mar 2024, but everything turned out fine.
Plus, a delayed Pectra mainnet gives dApps more time to build and optimize for the upgrade, leading to better-quality products. Ethereum Foundation also gets more time to strengthen the network.
Conclusion
In short, Pectra is a major Ethereum upgrade that will redefine how people use the network. While it won’t pump $ETH in the short term, its long-term impact could be huge. And sooner or later, it’ll go live successfully.
Research conducted by Monolith team.
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