Ethereum is about to receive its next upgrade, Pectra.

Technically, Pectra is the largest upgrade Ethereum has ever seen because it features 11 different EIPs or changes.

But what will these changes do, and what will Pectra mean for Ethereum and its users? That's what I'm going to explore today.

As with all updates since The Merge, Pectra is a combination of Execution Layer and Consensus Layer upgrades -- in this case, Prague and Electra respectively. (See here for more on this).

But unlike some previous updates, Pectra lacks a dramatic headline feature for everyone to focus on.

Instead, it's better thought of as a collection of iterative improvements to various aspects of Ethereum, including accounts, staking, and blobs.

Staking will see the biggest changes, with 5 EIPs affecting this area. However, most users won't notice these. Instead, they're most likely to experience and benefit from an EIP introducing account abstraction features to existing wallets. But, more on all this shortly.

Interestingly, despite being chockful of changes, Pectra was almost even larger. At one point, almost twice as many EIPs were considered for inclusion before it was whittled down due to concerns about doing too much at once.

It has also faced a rather rocky road to mainnet, with two testnets suffering issues after receiving the update. However, it should be noted that neither of those incidents were because of issues in Pectra itself, and the upgrade has been successfully run on a newly launched testnet called Hoodi.

Now, with all that background out of the way, let's explore some of Pectra's biggest features.

Because it's likely to be the most noticeable change, let's start by looking at EIP-7702, which enables users to transform their boring normal wallets into smart wallets with all sorts of fancy features. Essentially, it's the first step towards widespread account abstraction on Ethereum.

In Ethereum, traditional accounts controlled by private keys held in user wallets are known as 'Externally Owned Accounts' (EOAs). If you've ever interacted with Ethereum, or any similar chain, then you've probably done that with an EOA -- and so you'll know they're pretty limited. They certainly don't have smart features like the ability to batch multiple transactions into one or to pay transaction fees using alternative assets.

7702 will change this by introducing a new type of transaction that lets users delegate control of their EOA to a chosen smart contract, giving their account the smart contract's features and abilities.

Crucially, the user's account is ultimately still controlled by their private key, so they remain in complete control of their account at all times. If they want to retract their delegation, they can simply sign a new transaction to do that.

The idea is that users will opt into smart wallets with programmable features. These include gas sponsorship, where apps cover transaction fees so users can pay in whatever asset they like; transaction batching, which would remove the need to sign separate approval and swap transactions; as well as spending limits and other security and account recovery features.

As I understand, some developers wanted to push things further by introducing more ambitious changes relating to account abstraction. Perhaps those changes will come in time. But the beauty of 7702, and the reason it was included in Pectra, is that it fits cleanly into Ethereum's existing account infrastructure. Users can benefit from smart wallet features on their existing accounts, without having to migrate funds to new addresses or deploy expensive smart contract wallets.

Ultimately, it's a kind of 'best-of-both-worlds' approach that will hopefully bring some quality-of-life improvements to Ethereum users. I'm excited to see what's built with it.

As mentioned earlier, staking is Pectra's biggest beneficiary, with 5 EIPs targeting this area.

Of those 5, one stands out above the rest: EIP-7251, or MaxEB. This raises validators' maximum effective balance, essentially the amount of ETH they can each stake, from 32 to 2048.

Today, all Ethereum validators -- the people who help produce blocks and keep the network running -- have an effective balance of 32 ETH. In other words, any ETH they hold or earn over this threshold doesn't count towards their voting power or make them any more likely to produce blocks. It's essentially wasted ETH.

Therefore, anyone with more than 32 ETH would need to run multiple validators if they wanted to stake it all. So, someone with 64 ETH would need to run 2 validators, someone with 96 ETH would need to run 3 validators, and so on.

That's not a great UX for stakers, who may have to manage multiple validators at the same time, probably on the same machine.

Worse, it's harmful for the Ethereum network, because all of those validators have to communicate and sign messages once every epoch (32 blocks). So there are a lot of messages being passed around, and a lot of bandwidth consumed, quite unnecessarily.

If everyone running multiple validators could consolidate their balances, it could significantly reduce those bandwidth requirements. Then, that bandwidth can be repurposed in more useful ways, such as increasing the size of blocks to squeeze in more transactions and reduce fees.

And that's exactly what EIP-7251 does.

By increasing the maximum effective balance from 32 to 2048 ETH, the update will enable many validators to consolidate their balance into one account. Plus, smaller stakers will be able to make the most of their earnings as every additional ETH they earn will count towards their staking balance.

A validator's voting power and probability of proposing a block will both scale with the number of ETH they stake. Someone with the maximum of 2048 ETH will 'weigh' 64x as much as someone with a 32 ETH validator.

It's important to note that none of this changes the security or decentralisation of the network. The number of actual people behind the validators will stay the same, it will just work more efficiently.

Some additional tweaks are required to get this working properly. For instance, the slashing risk for large stakers would increase slightly, and so the slashing penalty per ETH staked has been reduced to account for this. The EIP will also enable partial withdrawals and let users set a ceiling for their balance, after which any ETH earned could be withdrawn.

The other changes to staking are much smaller.

EIP-7002 will let validators control withdrawals using smart contracts on the Execution Layer rather than on the Consensus Layer, for example. And EIP-6110 fixes some technical debt from a pre-Merge world, enabling faster and less complex deposits.

The other update worth talking about is the changes to Blobs and calldata coming with Pectra.

Blobs are the containers attached to Ethereum blocks that hold arbitrary data. Because they can be safely discarded after a short time, they don't hurt Ethereum as much as calldata, which lets users store information inside blocks. Therefore, blob storage can be offered at a much lower price compared to calldata, making it ideal for L2s and their data needs. (I discussed this in more detail here).

Currently, Ethereum aims for 3 blobs per block and allows a maximum of 6 blobs per block.

Pectra will change this. EIP-7691 will double the target blob count to 6 per block, with a new maximum of 9 blobs per block.

That means Ethereum's data capacity will increase, making life a little easier for its growing L2 ecosystem. However, it's not a game changer -- and most Ethereum developers would happily admit to this. Really, this is a temporary increase to keep things running until PeerDAS arrives in Ethereum's next big upgrade, which will allow an even greater blob capacity.

At the same time, EIP-7623 will increase the cost of in-block calldata storage, helping to offset the impact of the additional blobs in worst-case scenarios.

Currently, calldata is priced at 16 gas per byte. Therefore, with the current 36m gas block size, a block could conceivably be as large as 2.2 megabytes plus blobs. 7623 will raise this to 40 gas per byte, capping blocks at 0.9 megabytes plus blobs. That's just a bit easier for the network to handle -- again keeping those bandwidth constraints in mind.

Together, this pair of upgrades will encourage L2s to exclusively use blobs for their storage needs, while the majority of transactions will be unaffected.

That's really it for Pectra.

Of course, there are other changes in there, but they're not super interesting for most people. Overall, I think Pectra won't be particularly interesting for most people.

As I said at the start, there isn't anything dramatic or exciting here, it's just a collection of iterative improvements for Ethereum.

On its own, that wouldn't be a problem. But Pectra arrives at a difficult time for Ethereum.

Competitors like Celestia and, primarily, Solana are putting it under more pressure than ever before, surpassing it in key areas. Markets have punished ETH for its inability to capture value from L2s and its failure to compete with Bitcoin as a new form of money. Vibes have deteriorated and Ethereans have looked a little lost of late.

The sum of all of this is that Ethereum needs some dramatic changes to reset its narratives and re-energise the community -- and you can't describe Petra that way.

To be fair to them, the Ethereum Foundation and many leading developers have finally recognised the problems and are now talking a good game. But actions matter more than words, and real change will take time.

There's a possibility that delivering such an uninspiring and lacklustre update as Pectra will be oil on the fire for Ethereum's critics. The changes they're now talking about really need to be delivered today.

So the summary is: Pectra delivers some sensible and useful features, making things more efficient and introducing some new functionality. But, unfortunately, it's not the game-changer Ethereum really needs to reverse its fortunes.

📺 Youtube: https://www.youtube.com/c/TopicCrypto

🐦 Twitter: https://twitter.com/topiccrypto

📚 Medium: https://medium.com/topic-crypto

📚 Mirror: https://mirror.xyz/topiccrypto.eth

Disclaimer: Anything expressed here is my own opinion stated for informational and educational purposes; nothing I say should be taken as investment or financial advice. Many projects mentioned on this channel are highly experimental and therefore come with risks. Please evaluate your own risk tolerance before experimenting with these projects, and remember that investing in cryptoassets is extremely high risk and could result in total loss of capital.

I may own some of the cryptoassets mentioned.

Ethereum is about to receive its next upgrade, Pectra.

Technically, Pectra is the largest upgrade Ethereum has ever seen because it features 11 different EIPs or changes.

But what will these changes do, and what will Pectra mean for Ethereum and its users? That's what I'm going to explore today.

As with all updates since The Merge, Pectra is a combination of Execution Layer and Consensus Layer upgrades -- in this case, Prague and Electra respectively. (See here for more on this).

But unlike some previous updates, Pectra lacks a dramatic headline feature for everyone to focus on.

Instead, it's better thought of as a collection of iterative improvements to various aspects of Ethereum, including accounts, staking, and blobs.

Staking will see the biggest changes, with 5 EIPs affecting this area. However, most users won't notice these. Instead, they're most likely to experience and benefit from an EIP introducing account abstraction features to existing wallets. But, more on all this shortly.

Interestingly, despite being chockful of changes, Pectra was almost even larger. At one point, almost twice as many EIPs were considered for inclusion before it was whittled down due to concerns about doing too much at once.

It has also faced a rather rocky road to mainnet, with two testnets suffering issues after receiving the update. However, it should be noted that neither of those incidents were because of issues in Pectra itself, and the upgrade has been successfully run on a newly launched testnet called Hoodi.

Now, with all that background out of the way, let's explore some of Pectra's biggest features.

Because it's likely to be the most noticeable change, let's start by looking at EIP-7702, which enables users to transform their boring normal wallets into smart wallets with all sorts of fancy features. Essentially, it's the first step towards widespread account abstraction on Ethereum.

In Ethereum, traditional accounts controlled by private keys held in user wallets are known as 'Externally Owned Accounts' (EOAs). If you've ever interacted with Ethereum, or any similar chain, then you've probably done that with an EOA -- and so you'll know they're pretty limited. They certainly don't have smart features like the ability to batch multiple transactions into one or to pay transaction fees using alternative assets.

7702 will change this by introducing a new type of transaction that lets users delegate control of their EOA to a chosen smart contract, giving their account the smart contract's features and abilities.

Crucially, the user's account is ultimately still controlled by their private key, so they remain in complete control of their account at all times. If they want to retract their delegation, they can simply sign a new transaction to do that.

The idea is that users will opt into smart wallets with programmable features. These include gas sponsorship, where apps cover transaction fees so users can pay in whatever asset they like; transaction batching, which would remove the need to sign separate approval and swap transactions; as well as spending limits and other security and account recovery features.

As I understand, some developers wanted to push things further by introducing more ambitious changes relating to account abstraction. Perhaps those changes will come in time. But the beauty of 7702, and the reason it was included in Pectra, is that it fits cleanly into Ethereum's existing account infrastructure. Users can benefit from smart wallet features on their existing accounts, without having to migrate funds to new addresses or deploy expensive smart contract wallets.

Ultimately, it's a kind of 'best-of-both-worlds' approach that will hopefully bring some quality-of-life improvements to Ethereum users. I'm excited to see what's built with it.

As mentioned earlier, staking is Pectra's biggest beneficiary, with 5 EIPs targeting this area.

Of those 5, one stands out above the rest: EIP-7251, or MaxEB. This raises validators' maximum effective balance, essentially the amount of ETH they can each stake, from 32 to 2048.

Today, all Ethereum validators -- the people who help produce blocks and keep the network running -- have an effective balance of 32 ETH. In other words, any ETH they hold or earn over this threshold doesn't count towards their voting power or make them any more likely to produce blocks. It's essentially wasted ETH.

Therefore, anyone with more than 32 ETH would need to run multiple validators if they wanted to stake it all. So, someone with 64 ETH would need to run 2 validators, someone with 96 ETH would need to run 3 validators, and so on.

That's not a great UX for stakers, who may have to manage multiple validators at the same time, probably on the same machine.

Worse, it's harmful for the Ethereum network, because all of those validators have to communicate and sign messages once every epoch (32 blocks). So there are a lot of messages being passed around, and a lot of bandwidth consumed, quite unnecessarily.

If everyone running multiple validators could consolidate their balances, it could significantly reduce those bandwidth requirements. Then, that bandwidth can be repurposed in more useful ways, such as increasing the size of blocks to squeeze in more transactions and reduce fees.

And that's exactly what EIP-7251 does.

By increasing the maximum effective balance from 32 to 2048 ETH, the update will enable many validators to consolidate their balance into one account. Plus, smaller stakers will be able to make the most of their earnings as every additional ETH they earn will count towards their staking balance.

A validator's voting power and probability of proposing a block will both scale with the number of ETH they stake. Someone with the maximum of 2048 ETH will 'weigh' 64x as much as someone with a 32 ETH validator.

It's important to note that none of this changes the security or decentralisation of the network. The number of actual people behind the validators will stay the same, it will just work more efficiently.

Some additional tweaks are required to get this working properly. For instance, the slashing risk for large stakers would increase slightly, and so the slashing penalty per ETH staked has been reduced to account for this. The EIP will also enable partial withdrawals and let users set a ceiling for their balance, after which any ETH earned could be withdrawn.

The other changes to staking are much smaller.

EIP-7002 will let validators control withdrawals using smart contracts on the Execution Layer rather than on the Consensus Layer, for example. And EIP-6110 fixes some technical debt from a pre-Merge world, enabling faster and less complex deposits.

The other update worth talking about is the changes to Blobs and calldata coming with Pectra.

Blobs are the containers attached to Ethereum blocks that hold arbitrary data. Because they can be safely discarded after a short time, they don't hurt Ethereum as much as calldata, which lets users store information inside blocks. Therefore, blob storage can be offered at a much lower price compared to calldata, making it ideal for L2s and their data needs. (I discussed this in more detail here).

Currently, Ethereum aims for 3 blobs per block and allows a maximum of 6 blobs per block.

Pectra will change this. EIP-7691 will double the target blob count to 6 per block, with a new maximum of 9 blobs per block.

That means Ethereum's data capacity will increase, making life a little easier for its growing L2 ecosystem. However, it's not a game changer -- and most Ethereum developers would happily admit to this. Really, this is a temporary increase to keep things running until PeerDAS arrives in Ethereum's next big upgrade, which will allow an even greater blob capacity.

At the same time, EIP-7623 will increase the cost of in-block calldata storage, helping to offset the impact of the additional blobs in worst-case scenarios.

Currently, calldata is priced at 16 gas per byte. Therefore, with the current 36m gas block size, a block could conceivably be as large as 2.2 megabytes plus blobs. 7623 will raise this to 40 gas per byte, capping blocks at 0.9 megabytes plus blobs. That's just a bit easier for the network to handle -- again keeping those bandwidth constraints in mind.

Together, this pair of upgrades will encourage L2s to exclusively use blobs for their storage needs, while the majority of transactions will be unaffected.

That's really it for Pectra.

Of course, there are other changes in there, but they're not super interesting for most people. Overall, I think Pectra won't be particularly interesting for most people.

As I said at the start, there isn't anything dramatic or exciting here, it's just a collection of iterative improvements for Ethereum.

On its own, that wouldn't be a problem. But Pectra arrives at a difficult time for Ethereum.

Competitors like Celestia and, primarily, Solana are putting it under more pressure than ever before, surpassing it in key areas. Markets have punished ETH for its inability to capture value from L2s and its failure to compete with Bitcoin as a new form of money. Vibes have deteriorated and Ethereans have looked a little lost of late.

The sum of all of this is that Ethereum needs some dramatic changes to reset its narratives and re-energise the community -- and you can't describe Petra that way.

To be fair to them, the Ethereum Foundation and many leading developers have finally recognised the problems and are now talking a good game. But actions matter more than words, and real change will take time.

There's a possibility that delivering such an uninspiring and lacklustre update as Pectra will be oil on the fire for Ethereum's critics. The changes they're now talking about really need to be delivered today.

So the summary is: Pectra delivers some sensible and useful features, making things more efficient and introducing some new functionality. But, unfortunately, it's not the game-changer Ethereum really needs to reverse its fortunes.

📺 Youtube: https://www.youtube.com/c/TopicCrypto

🐦 Twitter: https://twitter.com/topiccrypto

📚 Medium: https://medium.com/topic-crypto

📚 Mirror: https://mirror.xyz/topiccrypto.eth

Disclaimer: Anything expressed here is my own opinion stated for informational and educational purposes; nothing I say should be taken as investment or financial advice. Many projects mentioned on this channel are highly experimental and therefore come with risks. Please evaluate your own risk tolerance before experimenting with these projects, and remember that investing in cryptoassets is extremely high risk and could result in total loss of capital.

I may own some of the cryptoassets mentioned.