An Ethereum upgrade is incoming!
Considering Ethereum’s importance within the cryptoverse, any updates to the largest smart contract platform are always bound to draw attention, and the next upgrade in line is Pectra! Pectra will not only bring a fundamental shift in how validators interact with the network but will also dramatically improve usability, which in turn will make Ethereum staking more accessible, will enhance validator efficiency, account abstraction will make wallets more powerful and will also lay the foundation for future scalability! Therefore, investing some time in trying to understand the next major milestone in Ethereum’s history is a no-brainer.
Pectra? What is that?
Ethereum’s upgrades always come with the most unique names. Think of Dencun and Shapella, for example, but where do these names come from? Upgrades for the network always come in pairs, one for the Consensus Layer and one for the Execution Layer. Execution Layer upgraders are traditionally named after cities significant to the Ethereum community, often corresponding to Devcon conference locations. For example, Berlin, London and Cancún all hosted Devcons. Consensus Layer upgrades are named after stars and follow an alphabetical order, such as Altair, Bellatrix, Capella, and Deneb. The upgrades’ unique names come from combining the two names of the Consensus and Execution Layer upgrade names. For example, Shapella merges Shanghai (for the Execution Layer) and Capella (for the Consensus Layer), while Pectra comes from Prague (for the Execution Layer) and Electra (for the Consensus Layer).
A naming convention that is stellar in nature, one must say!
Definitions: The Execution Layer and The Consensus Layer
Considering their importance, let’s make sure we understand what these two layers are before proceeding.
The Execution Layer: This is where user transactions get processed, smart contracts run, and the EVM state is managed.
The Consensus Layer (CL): This is where validators operate, blocks are finalised, and the network agrees on the canonical chain.
Great! Now that we got that out of the way let’s start digging deeper!
Why is Pectra Needed?
Pectra is the next step forward to better align the Ethereum network to its long-term goals, as the update aims to enhance validator efficiency, scalability, and usability. Let us understand the main issues with these three areas and how Pecta aims to improve them.
Validator Efficiency
As things stand, validators rely on off-chain coordination to deposit funds causing delays. Furthermore, exits must go through the Consensus Layer, which tends to lead to longer waiting times. Pectra fixes these issues by enabling on-chain validator deposits while at the same time, allowing Execution-Layer exits, making unstaking way faster and much more flexible.
Scalability
Currently, validators are limited to a maximum 32 ETH which forces large stakers to run multiple nodes. This large number of nodes increases the congestion on the network and, therefore, leads to inefficiencies. Hence, the Pectra upgrade addresses these issues by increasing the maximum balance for validators. What this will mean in practice is that large stakers running multiple validators will be incentives to consolidate their smaller 32 ETH validators into bigger ones, as it would make validator management easier. It should be noted that the Pectra upgrade does not change the minimum staking requirement, which will remain that of 32 ETH.
Usability
Right now, solo staking is quite complex for the average users, which pushes them toward liquid staking providers like Lido and Rocket Pool, which in turn causes staking power to become more centralised and, therefore, creates risks for the network. Pectra addresses this by making solos staking more practical, but not only that. Usability will also improve because of the proposed improvements aimed at enhancing user experience. Account abstraction is an initiative that will expand the user’s possibilities, allowing them several new things with their accounts, but more on this later.
It is time to delve deeper! Let’s see what Ethereum Improvement Proposals (EIPs) will be included in the Pectra Upgrade!
Overview of EIPs in Pectra
To have a better overview of all the changes that Pectra will bring, it makes sense to delve deeper into all the EIPs that are scheduled for inclusion. Although it may be a bit technical, this section aims to simplify every EIP to help you understand in detail all the changes that will occur, and therefore no technical background is needed for you to follow along!
EIP-7702: Set EOA account code
If you ask me, this is the EIP that I am mostly looking forward to! The goal of EIP-7702 is to make Externally Owned Accounts (EOA – a standard Ethereum term for user-controlled wallets, ones that use a private key, as opposed to contract accounts) point to existing contract code, and therefore making the EOA act like a contract wallet. This would allow all sorts of new functionalities and therefore it makes sense to discuss further what the new possibilities are.
Batching: You will be able to approve and transfer in one go! For example, when swapping tokens, instead of doing two transactions to approve the token and then to swap, users will be able to bundle them in a single transaction.
Sponsored Transactions: You are going to be able to ask someone else to sponsor your transaction, meaning someone else will pay the gas fees. This means that users with zero ETH in their wallet will still be able to perform actions by letting another address pay for gas.
Limited Permissions: This will allow you to set daily spend limits for example.
EIP-7251: Increase the MAX_EFFECTIVE_BALANCE
Currently, over 830,000 validators are actively validating the Ethereum network. While this is great for decentralisation, it may cause network congestion, so a solution is needed. Right now, validators require a minimum of 32 ETH to participate but are also restricted to only use a maximum of 32 ETH per validator. This, for example, forces large stakers to run multiple validators of 32 ETH each. To solve this, EIP-7251 will increase the max staking per validator from 32 ETH to 2048 ETH, effectively allowing large validators to consolidate their stake instead of running multiple smaller validators. This will, in turn, allow for a faster and more efficient Ethereum network, make life easier for large stakers, and allow more flexibility without significantly affecting security.
EIP-7691: Blob throughput increase
Blobs are special packages of data that each block can include. Currently, every block targets to have 3 blobs while having a maximum of 6 blobs, but EIP-7691 will increase the number of blobs per block to have a new target of 6 and a maximum of 9. What this will mean in practice is that it would increase data throughput for L2 usage.
EIP-7002: Execution Layer triggerable withdrawals
Right now, when you stake ETH, validators are only able to trigger withdrawals or exits by making use of their active key (hot key), but what if that key is lost or someone else controls it? Getting locked out of your own ETH is not something that anyone wants to experience, and therefore, EIP-7002 solves this by allowing withdrawal credentials (cold key) to request withdrawals and exits via the Execution Layer. Effectively, this removes the risk of your ETH being held hostage while also improving user experience.
EIP-6110: Supply validator deposits on chain
This EIP is designed to benefit validators and staking providers. What EIP-6110 will do is improve the security, speed and simplicity of Ethereum validator deposits. It will also move the processing of validator deposits from the Consensus Layer to the Execution Layer while, at the same time, removing the need for validators to vote on deposit data, therefore making the process much more secure and efficient. Just to get a sense of how impactful EIP-6110 will be, consider that it will slash the current twelve-hour depositing process to just around thirteen minutes!
EIP-7623: Increase calldata cost
It makes sense that before starting to delve deeper into this EIP, we make sure we understand what “calldata” is and what “Execution Layer payloads” are.
Calldata: a read-only, cost-efficient memory section in Ethereum transactions used to pass data to smart contracts but cannot be modified during execution.
To better understand this, consider the following example. Let’s say you use a token transfer smart contract and send a request: “Send 10 ETH to my friend Alice”. This request is stored in calldata and contains your request details (recipient = Alice, amount = 10 ETH). In turn, this would allow the smart contract to read this data to process the transaction. Once sent, calldata is immutable, meaning the contract cannot alter your request (e.g., it can’t change “10 ETH” to “100 ETH”), and therefore, this makes calldata a secure and cost-efficient way to pass information.
Execution Layer payloads: data and transactions included in an Ethereum block, processed by the Execution Layer to update the blockchain state.
Currently, Ethereum’s Execution Layer payloads typically have a maximum of 1.79MB when compressed, but theoretically, they can reach 7.15MB when uncompressed in calldata-heavy transactions. However, on average, blocks only use around 100KB of data. EIP-7623 aims to reduce the maximum possible size of calldata-transactions to around 0.72MB, which would mean better efficiency and a better, more optimised space for rollups and blobs.
EIP-2537: Precompile for BLS12-381 Curve Operations
To understand what is being proposed by EIP-2537, we need to first understand what BLS12-381 curve operations are. In simple words, BLS12-381 is an elliptic curve that is designed for efficient cryptographic operations (click here to learn more about BLS12-381!). What EIP-2537 will do is introduce a precompiled contract to handle the BLS12-381 curve operation more efficiently. What this means in practice is that gas costs will decrease while, at the same time, a higher level of security (120-bit) will be achieved compared to the existing BN254 curve (80-bit).
EIP-7549: Move committee index outside Attestation
With this EIP, Ethereum will modify the way it handles validators’ votes to make them more efficient, such that it would speed up the verification of consensus votes and reduce unnecessary overhead in verification while improving the efficiency of zero-knowledge (ZK) proofs for Ethereum’s Casper FFG consensus. What is Ethereum’s Casper FFG consensus, you ask? It is a key part of Etherum’s PoS consensus mechanism, which ensures that blocks are finalised and cannot be reversed. The impact of implementing EIP-7549 will be that it will make Ethereum’s consensus mechanism more scalable. It is important to note at this stage that this particular EIP requires a hard fork.
EIP-2935: Serve historical block hashes from state
This proposal proposes that the last 8,191 historical block hashes should be stored in a system contract to make them easily accessible to stateless clients and rollups. What are stateless clients? Well, in simple terms, a stateless client is an Ethereum node that does not store the full blockchain state, but would still be able to verify and process transactions by relying on cryptographic proof. A Summary of the key benefits of this proposal can be found in the table below.
EIP-7685: General purpose Execution Layer requests
This EIP will introduce a standard way of how contracts send “requests” from the Execution Layer to the Consensus Layer. What we mean when we say sending a request from the Execution Layer to the Consensus Layer, is that a smart contract running on the Execution Layer may want something done that only the Consensus Layer can do or verify. Instead of having an ad hoc approach, this EIP standardises the manner in which these “requests” are carried out.
EIP-7840: Add blob schedule to EL config files
The last EIP that will be added within this Pectra upgrade is EIP-7840 which aims to add a blobSchedule section to the Execution-Layer config files to set how many blobs can be included in blocks, and how their fees adjust over time. This matters as it makes it easier to change the blob limits while at the same time, it prevents back-and-forth between the execution and consensus clients.
Timeline: From Merge to Pectra and Beyond!
Pectra is the next stepping stone for Ethereum’s evolution, which builds on other upgrades that happened in the past. To understand this better, let’s have a quick overview of the biggest upgrades that happened in the recent past.
The Merge – Ethereum’s Shift to Proof-of-Stake
In September 2022, Ethereum transitioned from PoW to PoS in what can arguably be called one of the biggest software engineering feats ever. Essentially, what The Merge did was replace the consensus algorithm of Ethereum by having its Execution Layer merge with the Beacon Chain. At this stage, miners were replaced by validators, who were required to provide 32 ETH to participate in the new consensus mechanism, while at the same time, Ethereum’s energy consumption dropped by approximately 99.95%.
Shanghai/Capella – Unlocking Staked ETH Withdrawals
Another very important milestone was achieved in April 2023, when the Shanghai/Capella upgrade enabled full and partial withdrawal from validators. For the first time, stakers could withdraw their staked ETH since the Beacon Chain launched and introduced exit queues to manage staking withdrawals in a smooth manner.
Dencun Upgrade – Major Gas Fee Reductions for Layer 2s
2024 was Dencun’s year, when for the first time blobs were introduced via Proto-Danksharding which significantly reduced Layer 2 transaction fees. Rollups like Optimism and Arbiturm were given a helping hand by being provided with cheaper data storage, and therefore, not only gas fees on these Layers 2s decreased, but it also enabled the network to support applications that required a higher throughput.
Pectra Upgrade – Staking and Usability Improvements
And here we are! The Pectra upgrade which is expected to come live sometime in April 2025. But, what about the future? Let’s have a quick glance on what the next upgrade will be after Pectra!
Fusaka! – Pectra’s Follow-up Upgrade!
Given that the Fusaka upgrade is not imminent, details are not 100% confirmed, but that does not stop us from following the current discussion and the EIPs that are currently being considered. Here are some of the several key proposals that are being considered.
EVM Object Format (EOF): This would improve the efficiency and security of smart contracts on the Ethereum network by performing safety checks on EVM bytecode before execution.
Peer Distributed Aggregation Services (PeerDAS): It aims to enhance Ethereum’s data availability layer, improving scalability and efficiency.
Enshrined Proposer-Builder Separation: This proposal aims to formalise the separation between block proposers and block builders within the Ethereum protocol.
Considering the importance of Fusaka to the network, we strongly recommend that you follow Simply Staking’s socials and regularly visit our website, as we look forward to delving deeper into Fusaka at the opportune time!
Conclusion
Ethereum’s Pectra upgrade is a major step forward, bringing key improvements to staking, validator efficiency, and overall network usability. Although a lot more hard work is going to be required, Pectra marks an important milestone in Ethereum’s journey, and whether you’re a validator, staker, developer, or ETH holder, now is the time to get involved and prepare for the upgrade! How? You can experience Pectra on the Holešky and Sepolia testnets as the upgrade will be deployed there to test before, in preparation for the mainnet launch. Furthermore, make sure that you stay updated by following discussions via Ethereum.org and community forums to prepare as best you can for the change. Finally, make sure to follow Simply Staking on 𝕏 by clicking here and also explore more of our articles on our website.
