Ethereum 'Pectra' Imminent... Can It Reclaim Layer 1 Dominance? [Blockchain Web 3.0 Report]

Major Ethereum Update After One Year

'Pectra Upgrade' Underway

Focus on 'User Experience'... Gas Fees Payable with USDC

Validator Effective Balance Expanded from 32ETH to 2048ETH

Network Data Infrastructure Improved with 'Verkle Tree'

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The major update 'Pectra' for Ethereum (ETH), the leading altcoin, is about a month away. As this upgrade is the first since the 'Dencun' update in March last year, it is drawing significant attention from virtual asset (cryptocurrency) investors.

Today, let's take a closer look at the changes the Pectra update will bring to the Ethereum network ecosystem.

Focus on 'User Experience'... Gas Fees Payable with USDC

Pectra is a portmanteau of the execution layer update Prague and the consensus layer update Electra. The Pectra upgrade includes more than 10 EIP proposals and is scheduled to be implemented in two phases for stable network operation: February this year and 2026 (date unspecified).

Through the major Pectra update, the Ethereum network is expected to undergo significant changes in three main areas: △optimization of user experience △protocol improvement △expansion of data availability.

Among the upgrade contents, the change that virtual asset investors and ecosystem participants will feel most directly is the optimization of user experience through 'Account Abstraction (AA)'.

Account abstraction means abstracting the concept of accounts into one at the upper layer of the protocol to overcome functional limitations restricted by the type of Ethereum account. It supports users to use the chain more conveniently by connecting externally owned accounts (EOA) that transfer Ethereum and smart contract accounts (CA) used with separate contract codes.

Once account abstraction is implemented, the way users interact with the network fundamentally changes. Users will not need to hold Ethereum for network gas fees. Additionally, since the gas fees can be covered by the dApp operators, the chain accessibility for new users is expected to improve significantly.

Through the account abstraction included in the Pectra update, Ethereum plans to lower the entry barrier for users, allowing more users to easily access the network, thereby leading the large-scale adoption of blockchain.

Validator Effective Balance Expanded from 32ETH to 2048ETH

Image=Stakin

The Pectra upgrade also includes the 'EIP-7251' proposal to increase the effective staking balance of validators from 32ETH to 2048ETH for protocol improvement.

In the existing system, the Ethereum stake of validators was limited to a maximum of 32ETH, so even if stakers had a large Ethereum balance in their accounts, they could only receive rewards equivalent to 32ETH. Any stake exceeding the cap of 32ETH was automatically partially withdrawn, requiring separate management in other accounts. Therefore, large-scale Ethereum stakers had to stake their holdings in multiple accounts, each with 32ETH, to gain additional profits.

However, with the Pectra update, if EIP-7251 passes, it will be possible to operate the stake of up to 64 existing validators as one, enabling efficient validator operation in various areas such as network P2P messages, aggregated BLS signatures, and memory. Additionally, large-scale stakers will be able to accumulate rewards in their accounts without the need for complex processes, enjoying the benefits of compound interest.

Binance Research evaluated, "EIP-7251 is a proposal that can address the major challenges of the current Ethereum staking system, such as scalability, cost efficiency, and flexibility for large stake holders, maintaining the balance of network efficiency and decentralization through network scalability improvement and cost reduction."

The EIP-7002 proposal plans to introduce execution layer-triggered withdrawals. It will support stakers to fully control funds from the withdrawal credential address, enabling both partial withdrawals and full exits.

Previously, this could only be controlled by the validator's active key, which could lead to potential trust issues with different institutional stakers and staking services, but the EIP-7002 proposal can resolve these issues.

Network Data Infrastructure Improved with 'Verkle Tree'

The Ethereum Pectra includes several proposals for expanding the availability of transaction data on the network. The most notable among them is the introduction of the 'Verkle Tree'.

Verkle Tree is a portmanteau of vector commitment and the existing data processing method Merkle Tree, developed to improve the Ethereum data structure.

Verkle Tree applies vector commitments, which ensure the order of values in a block array, to the Merkle Tree method that compresses all information into a simple representation. Unlike Merkle Tree, it does not need to include sibling nodes in the proof process, allowing for a more concise storage while maintaining data verification capability.

With the application of Verkle Tree, the hardware requirements for node operation are reduced, enabling chain operation that is 6-8 times more efficient than the existing Merkle Tree. This is expected to allow Ethereum to build a cheaper and faster network infrastructure in the long term.

Additionally, the Pectra update includes △EIP-7692 for enhancing smart contract efficiency △EIP-6110 for introducing fully automated staking pools △EIP-2935 for implementing special storage slot functions to improve verification efficiency △EIP-7594 for introducing Peer Data Availability Sampling (PeerDAS) to optimize Layer 2 and improve transaction processing and scalability.

In February, the Ethereum network is set to undergo significant changes with the Pectra upgrade. Do you think Ethereum can fend off competitors like Solana (SOL) and rise again through Pectra?

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