Ethereum is gearing up for two major upgrades, Pectra and Fusaka. However, these upgrades don’t address underlying concerns with its tokenomics.
Ethereum (ETH) is set to roll out two major upgrades this year, Pectra and Fusaka. However, these upgrades come at a time when Ethereum is under constant threat, a research report by Binance, released on April 16, states.
With the next upgrades, improvements are coming to data availability, expanded support for layer-2 chains, and enhancements to wallets. However, investors continue to express concern over value accrual. Specifically, some of these upgrades appear to favor layer-2 networks over Ethereum’s own revenue generation.
Ethereum is getting better, but value capture is lacking
For one, the Petra upgrade, scheduled for May, will introduce more blobs. Blobs allow layer-2 networks to post more data to Ethereum, enabling them to lower their fees even further. However, this also means Ethereum’s income per transaction will decline.
The upgrade will also increase validator caps from 32 ETH to 2,048 ETH and introduce wallet improvements aimed at enhancing user experience. While these changes are technically significant, they don’t directly accrue value to ETH holders.
The Fusaka upgrade, scheduled for later this year, will bring improvements to dark sharding and developer experience. Notably, the introduction of the Ethereum Object Format is expected to make smart contracts easier to write, potentially reducing errors and security risks.
The upgrades position Ethereum to become the foundational infrastructure for the future of Web3. By empowering layer-2 networks, Ethereum aims to place itself at the center of a broader Web3 ecosystem. Still, this offers little comfort to ETH holders, who are looking for value and returns.
Notably, trading at $1,567, Ethereum has lost more than 60% of its value since its December high of $4,106. A drop in network volume. largely due to the rise of L2s, has led to lower trading fee generation. As a result, ETH is becoming more inflationary, raising concerns among investors.
