The Ethereum core development team has announced that the Pectra upgrade will be released by the end of the first quarter of 2025. This upgrade follows the successful deployment of the Dencun upgrade in March 2024. The decision to schedule Pectra for early 2025 was made to avoid rushing the release and to incorporate more impactful user features.
Ethereum developers have deliberated over several timeline scenarios for the Pectra upgrade. They concluded that delaying the launch until after the Devcon developer summit, scheduled for November 2024 in Bangkok, would be beneficial. Devcon, the largest developer summit in the Asia Pacific region, will take place in Bangkok from November 12 to 15. The developers emphasized that this strategic approach allows for a more measured development process and the inclusion of additional features.
Enhancements in the Pectra Upgrade
The Pectra upgrade will focus on enhancing both the consensus and execution layers of Ethereum. A significant improvement will be the integration of PeerDAS, aimed at boosting Ethereum’s Data Availability capacity ahead of the Osaka upgrade. The Osaka upgrade, a future hard fork, is expected to include features initially considered for Pectra but postponed for a more refined implementation, such as Verkle Trees to enhance scalability and decentralization.
In the Execution Layer Meeting, the team discussed supporting longstanding authorization use cases in Ethereum’s account management system. They debated mechanisms to keep authorizations active during transactions, including Max L and non-optional authorizations, and the use of 7702 for standardized proxies. Additionally, the developers are considering including EOF (Ethereum Object Format) to improve smart contract security and developer experience. A proposal to replace EIP-3074 with EIP-7702 would achieve better account abstraction compatibility.
Ethereum’s Market Performance and Institutional Interest
According to L2BEAT, the total value locked (TVL) in Ethereum Layer 2 networks has reached a record high of $47.45 billion. Arbitrum One leads with a TVL of $19.3 billion, followed by OP Mainnet at $7.88 billion and Base at $6.94 billion. Other blockchains with over $1 billion in TVL include Blast, Mantle, Linea, and Starknet. The overall TVL of all Ethereum Layer 2s has surged by 17.39% in the past week.
The recent bullish trend is primarily driven by the U.S. Securities and Exchange Commission’s (SEC) approval of spot Ethereum exchange-traded funds (ETFs) on May 23. The SEC approved ETF applications from eight issuers, including BlackRock, Fidelity, Grayscale, and VanEck. This marks the second spot digital asset ETF approval in the U.S., following the spot Bitcoin ETFs in January. These issuers are in the process of submitting S-1 forms, with launches anticipated within weeks.
Ethereum’s price has climbed to a two-month high of over $3900, less than a week after the SEC approved 19b-4 filings for eight spot ETFs related to the digital asset. This caps a week of positive performance for Ethereum, significantly outpacing the top 10 cryptocurrencies by market capitalization. During the reporting period, ETH’s value increased by approximately 27%, while Bitcoin saw a modest gain of 2%.
Stakeholder Insights
Several stakeholders have commented on the impact of the ETF approval. MicroStrategy executive chairman Michael Saylor stated that the approval of an ETH ETF has further legitimized the emerging industry. Arthur Cheong, founder of DeFiance Capital, mentioned that ETH’s price could hit $4,500 before the ETFs begin trading. JPMorgan predicted that the ETF will launch before the US presidential elections.
The upcoming Pectra upgrade, planned for the first quarter of 2025, is expected to further enhance Ethereum’s capabilities following the successful implementation of the Dencun upgrade in March.