Ethereum developers are gearing up for the Pectra upgrade, set to enhance scalability by optimizing blob-carrying transactions. Central to this effort is EIP-7742, a proposal that aims to dynamically manage blob gas limits, bringing Ethereum one step closer to supporting 100,000 transactions per second.
EIP-7742 – The Key To Unlocking Scalability
According to Christine Kim, Vice President of Research at Galaxy Digital, EIP-7742 will allow the consensus layer to adjust blob gas targets in real-time. This improvement comes at a critical time—Ethereum co-founder Vitalik Buterin recently warned that the fixed blob count was approaching full capacity, threatening to stall network scalability.
Blobs, introduced via EIP-4844 during the Dencun upgrade in March 2024, are large but temporary data packages used to make layer 2 transactions cheaper. However, the network’s growing demand for these blobs calls for more flexible handling, which EIP-7742 aims to address by increasing the blob count dynamically.
Ethereum’s Scalability Vision – “The Surge”
The Pectra fork, expected by late 2024 or early 2025, plays a pivotal role in Ethereum’s scalability roadmap known as “The Surge.” This ambitious plan focuses on leveraging layer 2 solutions to reduce transaction costs and increase throughput.
However, some challenges remain. A complementary proposal, EIP-7623, aims to reduce the block size from 2.7MB to 1MB, freeing up space for more blob transactions. This, combined with EIP-7742’s flexibility, should help the network maintain high performance while accommodating increased demand.
Layer 2 Solutions – A Blessing or a Burden?
While Ethereum’s pivot toward layer 2 solutions has boosted transaction speed and affordability, it has also had unintended consequences. Matthew Sigel, Head of Digital Asset Research at VanEck, noted that over the last four months, the revenue ratio between Ethereum’s mainnet and layer 2s has flipped to 10:90, a sharp contrast to earlier expectations.
This shift in revenue dynamics has forced VanEck to revise its long-term price target for Ether (ETH). Initially, the firm predicted ETH would reach $22,000 by 2030. However, with layer 2s now dominating revenue streams, that target has dropped by 67% to $7,330.
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Adding to the pressure, Uniswap—one of Ethereum’s largest decentralized exchanges—has begun building Unichain, a new layer 2 network. This pivot could further reduce Ethereum’s revenue share, impacting Ether’s price, which currently sits at $2,615.
Ethereum’s Pectra fork and the adoption of EIP-7742 reflect the network’s ongoing efforts to tackle scalability through innovation. While layer 2 solutions have made transactions cheaper and faster, the long-term impact on Ethereum’s revenue model and ETH price raises questions. As developers push for a seamless upgrade, investors and users will be closely watching how these changes unfold—balancing scalability with sustainability.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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