What will change for Ethereum users and what the major innovations will be as part of the major Pectra update
In April 2025, the Ethereum blockchain network is slated for one of the largest upgrades in recent years, dubbed Pectra. The implementation includes mechanisms to increase scalability, reduce transaction fees, improve staking rewards for node operators, and make the network easier for end users to use.
On March 5, developers successfully activated the Pectra update on the Sepolia test network, completing the final phase before launching on the main Ethereum network.
Pectra is the third major update following Ethereum's transition to a new algorithm, Proof-of-Stake. The transition took place as part of an update called The Merge. This event meant that the Ethereum blockchain network no longer runs on the Proof-of-Work algorithm as it does in bitcoin.
The Merge implied that instead of buying computing hardware, such as video cards, one should lock in at least 32 ETH (about $70 thousand as of March 5) in a special smart contract of the network. Only through such investments one can get the opportunity to create new ETH coins, as well as participate in the validation process of users' transactions, receiving a commission for transactions from them.
As of the beginning of March, Pectra is in the active testing stage, on March 5 the update took place in the Sepolia test network, after which the implementation will take place in the Ethereum blockchain itself.
And the Pectra update itself is divided into two stages. According to Decrypt's estimates, the tentative time of implementation of the first stage in the Ethereum core network is scheduled for March 2025, while the second stage is planned for the end of the year or early 2026.
First stage of update
At the first stage, expected this spring, mechanisms will be introduced to reduce commissions in the main network and so-called L2 networks such as Arbitrum, Optimism, zkSync, Starknet. It is also planned to include the Account Abstraction feature, designed to introduce the possibility of paying transaction fees in tokens other than ETH, such as USDT, DAI or USDC.
This is important because all blockchain networks only use native blockchain tokens to pay commissions. This is different from the usual banking apps, where the user pays the commission in the currency of the transfer without thinking about what exchange mechanisms are behind it. For example, in Ethereum (as well as other networks), if a user has USDT on their balance, they don't have the technical ability to transfer it to another address or conduct a transaction without paying a fee in ETH.
As part of the first phase, they also plan to implement an increase in the limit on staking from 32 to 2048 ETH (from $70 thousand to $4.5 million). This move will allow node operators to manage their investments more efficiently. Prior to the update, operators install special software separately for each locked 32 ETH, and cannot receive additional rewards on the accumulated percentage of their investments.
For example, a small operator who invested 32 ETH in staking after a year was able to accumulate about 4% (1.28 ETH) of the invested 32 ETH (according to the approximate current rate in Ethereum). However, he is unable to earn interest income on that 1.28 ETH due to restrictions. The only thing he can do is leave the income on his balance, or withdraw it.
Second stage of update
The second phase of the Pectra upgrade, scheduled for late 2025 or early 2026, will implement elements to improve data storage and network efficiency. The improvements will relate to the Ethereum Virtual Machine (EVM), which will make smart contracts more efficient. And technologies to increase Layer 2 scalability by reducing network loads.
The fact is that Ethereum and the networks based on it (L2) are very sensitive to loads, at the moment of increase of which the fees for any transactions increase. At the time of writing, according to the L2Fees service, the commission in the Ethereum network, depending on the nature of the transaction (transfer, exchange, interaction with smart contracts) ranges from $1 to $5. And in L2 networks from $0.04 to $3, at the time of congestion fees can multiply up to tens of dollars.
