Ethereum Pectra Upgrade: From Decentralization Ideal to Institution-Led New Landscape

The Ethereum Pectra upgrade officially went live on March 5, integrating the Prague and Electra updates, aiming to optimize the execution layer and consensus layer. This upgrade introduces 11 Ethereum Improvement Proposals, scheduled to be deployed to the mainnet on April 8. The Pectra upgrade will be implemented in two phases:

Phase One ( Mid-March 2025 )

• Layer 2 Blob capacity doubled from 3 to 6 blocks per block
• Support account abstraction, allowing the use of stablecoins to pay gas fees
• The validator staking limit has been increased from 32 Ether to 2,048 Ether.

Phase Two ( by the end of 2025 or early 2026 )

• Implement Verkle trees to improve data storage and synchronization efficiency
• Introduce peer-to-peer data availability sampling (PeerDAS) technology

Main Improvement Proposal

1. Account abstraction: Allows external accounts to perform some smart contract functions to enhance wallet flexibility.

2. Increased validator staking limit: The maximum staking balance has been increased from 32 ETH to 2,048 ETH, simplifying management but potentially increasing centralization.

3. Optimization of withdrawal mechanism: Simplify the withdrawal process and improve flexibility.

4. Validator activation acceleration: shortened from 9 hours to 13 minutes, improving participation efficiency.

5. Block size expansion: increase capacity by 50%, enhance transaction processing volume.

6. Increased MEV transparency: Provide users and developers with more information about MEV activities.

7. Gas fee structure adjustment: Optimize the network fee mechanism to balance the load during peak periods.

8. Governance mechanism improvement: Enhance the transparency and efficiency of decentralized governance.

9. Validator penalty mechanism optimization: Adjust penalty measures to ensure network security.

10. Improvement of Smart Contract Performance: Reduce execution costs and increase operational efficiency.

11. Cross-chain compatibility enhancements: Support more cross-chain operations to promote interoperability.

Impact of Pectra Upgrade

1. DApps development is simplified and user experience is improved.

2. Ethereum is facing an L2 "parasitic" effect, with reduced mainnet transaction fees and rising inflation.

3. The increase in staking thresholds may attract institutional investment, but it also exacerbates the trend of centralization.

4. Network security and scalability are enhanced, but the degree of decentralization is compromised.

5. The Ethereum narrative is challenged and a new direction needs to be clarified.

6. ETF staking may become a new focus in the short term, expected to enhance the value expectations of Ethereum.

Overall, the upgrade of Pectra to Ethereum has brought significant improvements but has also raised considerations regarding the network's decentralization and long-term value. In the future, Ethereum needs to find a balance between efficiency, security, and decentralization to cope with the increasingly fierce competition in the blockchain space.