With the upgrade approaching, can Pectra boost the price of ETH?

Author: Mark Dewolf

Compilation: Vernacular Blockchain

! [With an upgrade imminent, can Pectra boost the ETH price?] ](https://img.gateio.im/social/moments-9cceedb556a9c8e176ac485e780ebd0a)

After a 45% price drop in Q1, Ethereum (ETH) may be preparing for a resurgence. On May 7, the highly anticipated Pectra upgrade is expected to pass final testing, paving the way for mainnet launch.

This network upgrade is a combination of two improvement packages - Prague and Electra, collectively known as Pectra, which includes 9 Ethereum Improvement Proposals (EIPs). These changes are aimed at simplifying the onboarding process for new retail traders while making the world’s second-largest blockchain more attractive to institutions.

Pectra will increase the validator staking limit from 32 ETH to 2048 ETH, reducing the need to run multiple validator nodes. By simplifying the staking process, Ethereum’s administrators hope to achieve stronger liquidity locking and even facilitate the flow of funds for large holders.

If user experience (UX) improves, large investors will be able to participate more easily, and on-chain activities should increase significantly – this is their expectation. The price trend of Ethereum after the Pectra upgrade will be a key indicator for the cryptocurrency market in the second quarter. Let’s take a look at what lies behind it.

What is the Ethereum Pectra upgrade?

Pectra is an upgrade to the Ethereum blockchain aimed at improving staking efficiency, enhancing user experience, continuing to advance the rollup-centric scalability roadmap, and strengthening Ethereum’s decentralization features.

Before the merge, Prague focused on improvements to the Ethereum execution layer, while Electra concentrated on upgrades to the consensus layer.

The Pectra upgrade has been highly anticipated for months and now has an official launch date: May 7, 2025. If all goes according to plan, it will be the biggest update ever for Ethereum.

Pectra’s main proposal

As of March 2025, the Pectra upgrade includes the following nine EIPs:

• EIP-2537: New precompiled contract that provides 120+ bits of security operations, which is higher than the existing BN254 precompiled contract’s 80 bits of security.
• EIP-2935: Save historical block hashes to support stateless clients.
• EIP-6110: On-chain provision for validator deposits.
• EIP-7002: A new mechanism that allows validators to trigger withdrawals and withdrawals through execution layer withdrawal credentials.
• EIP-7251: Increase the maximum staking limit for Ethereum validators from 32 ETH to 2048 ETH.
• EIP-7549: Provides additional data availability for Ethereum Layer 2 (L2).
• EIP-7685: A framework that allows validator smart contracts to perform specific operations.
• EIP-7702: Improvements to the user experience for external account (EOA).
• EIP-7742: Decoupling the Blob count of the consensus layer and the execution layer.

Among them, EIP-6110, EIP-7002, EIP-7251, EIP-7549, and EIP-7742 will be applied to Ethereum’s consensus layer; EIP-2537, EIP-2935, EIP-6110, EIP-7685, EIP-7002, EIP-7702, and EIP-7742 will change Ethereum’s execution layer.

The main features of Pectra ###

More efficient staking

Currently, Ethereum limits the staking size for a single validator to 32 ETH. For larger transactions, this limitation requires trading entities to run a large number of validator nodes.

With the introduction of EIP-7251, the maximum staking limit for each validator node will be increased from 32 ETH to 2048 ETH. However, the minimum validator staking threshold remains at 32 ETH to not hinder individual staking.

The increase in the maximum staking limit will allow large validators to consolidate and run fewer nodes, thereby reducing the number of peer-to-peer messages and digital signatures.

Small validators can still increase their stake instead of accumulating in multiples of 32 ETH to run multiple validator nodes.

As of December 2, 2024, Ethereum has over 1.07 million daily active validators. A large number of validators may lead to higher computational and bandwidth loads on the network.

User Experience Improvement

The Pectra upgrade includes multiple EIPs aimed at improving the user experience for Ethereum users and developers.

EIP-7702 will introduce a new transaction type that allows multiple actions by the same user to be completed in a single transaction. This upgrade will also allow an account to sponsor gas fees for another account. We have previously discussed this “gas abstraction.”

“Permission Downgrade” is a new feature introduced by EIP-7702 that allows users to authorize conditional spending. For example, authorizing spending of specific types of ERC-20 Tokens or 2% of the total balance per day.

EIP-2537 will also introduce new features used in zero-knowledge cryptography, while EIP-7002 will make the Ethereum staking pool experience more trustless by introducing a mechanism for smart contracts to trigger validator exits.

Improved Rollup Scalability

Pectra upgrade further develops the data Blob introduced in the original Danksharding, significantly reducing the gas fees for Ethereum Layer 2 (L2).

EIP-7594 will introduce a new protocol called PeerDAS, allowing nodes to verify the availability of L2 Blob data by downloading only a portion of the data.

How might Pectra affect the value of ETH?

In a research report released last October, Christine Kim, vice president of research at Galaxy, wrote that the impact of mainnet (L1) protocol upgrades on ETH’s value will gradually diminish as Ethereum moves forward with its rollup-centric scaling roadmap.

She added that the upgrades on layer (L2) could have the greatest impact on ETH value, as Ethereum’s revenue in the future may primarily be driven by user activity on L2.

From $3 to $4000, then a drop: The price history of Ethereum as of April 6, 2025. Source: CoinMarketCap

Christine Kim pointed out: “Upgrading user experience, interoperability, decentralization, and security on L2 is more important to the value of Ethereum than optimizing and improving the base layer.”

Summary

The Ethereum rollup-centric scaling plan has sparked differing opinions among analysts, with its uncertainties potentially impacting market valuations over the past year.

! [With an upgrade imminent, can Pectra boost the ETH price?] ](https://img.gateio.im/social/moments-c12515d4b40600180501bc76431d9a0e)

However, network upgrades like the original Danksharding and Pectra show a high level of planning and effort. Ethereum – the (dApps) of decentralized applications, the (DeFi) of decentralized finance, and the backbone that drives many parts of the modern crypto market – will undoubtedly benefit from greater efficiency and flexibility.