A new era with Pectra, what impact on price?

The Ethereum network is preparing to take a new crucial step in its evolution. The next Pectra fork, planned for late 2024 or early 2025, aims to optimize transaction fees for Layer 2 (L2) scaling solutions. This update could well redefine the network’s economics and accelerate crypto adoption.

A technical adjustment for concrete gains

The heart of Pectra lies in the implementation of EIP-7742, an improvement proposal that will revolutionize the management of “blobs”. These temporary data blocks, introduced in March 2024 with the Dencun update, play a key role in reducing L2 transaction costs.

EIP-7742 will allow the Ethereum consensus layer to dynamically adjust the target and maximum values ​​of the “blob gas”. Concretely, this means that the network will be able to adapt in real time to demand, thus optimizing the use of resources.

Christine Kim, vice president of research at Galaxy Digital, points out that this increased flexibility should “increase the number of blobs,” currently limited by fixed capacity.

This technical development responds to a pressing need. Vitalik Buterin, co-founder of Ethereum, recently warned about the limits of the current system, which risked slowing down the scalability of the network. Pectra therefore appears to be a strategic response to maintaining Ethereum’s competitiveness against competing blockchains.

An economic impact to monitor closely

If the technical advantages of Pectra seem obvious, its economic repercussions raise questions. Matthew Sigel, head of digital assets research at VanEck, warns of a potential decline in Ethereum mainnet revenue to benefit L2s.

This trend, already observed for several months, could be accentuated with Pectra. Sigel has also revised downwards his price forecasts for Ether, going from a target of $22,000 to $7,330 by 2030 if the current distribution of revenues between Ethereum and L2s (10:90 ) is maintained.

In short, the Pectra fork promises to be a major turning point for the crypto ecosystem. By optimizing transaction fees, it could accelerate the adoption of L2 solutions and redefine the economic balance of the Ethereum network. Investors and developers will need to closely monitor these developments to seize all the opportunities.