Ethereum’s Pectra Upgrade: What to Expect and How It Will Transform the Network

Around April 2025, one of the most important improvements to Ethereum’s blockchain in a long time, Pectra, is scheduled to be implemented. This major upgrade will aim to improve scalability, reduce transaction costs, improve rewards for staking by node operators, and enhance the user experience among other things.

The Pectra improvement is a monumental step towards enabling the Ethereum network to be faster, cheaper and easier to use. Let us explore the most important features of this upgrade.

Understanding the Ethereum Pectra Upgrade

Pectra is a substantial upgrade to Ethereum’s architecture, targeting both the execution layer (which runs smart contracts and decentralized applications) and the consensus layer (which validates transactions via Proof of Stake). By integrating multiple Ethereum Improvement Proposals (EIPs), Pectra is designed to:

• Enhance scalability to accommodate a higher transaction volume.
• Simplify gas fees and account management to improve user accessibility.
• Strengthen security measures while optimizing staking operations.

Scheduled for deployment in two phases beginning 11th of March 2025, Pectra unifies two previously planned upgrades, Prague and Electra. This major hard fork is geared toward advancing Ethereum’s scalability, security, and usability, solidifying its role as a foundational pillar in blockchain technology.

The name “Pectra” is a fusion of “Prague” and “Electra,” underscoring its dual approach to refining both execution and consensus layers. This update follows in the footsteps of previous Ethereum milestones — The Merge, Shanghai-Capella (Shapella), and Dencun — by addressing existing limitations and setting the stage for future innovations.

When Will the Upgrade Happen?

On 5th of March, developers managed to enable Pectra on the Sepolia testnet. This was the last test before it gets launched on Ethereum’s mainnet.

Pectra is Ethereum’s third significant update after the network switched to Proof-of-Stake (PoS) consensus. The Merge Ethereum used to follow a quite inefficient Proof-of-Work (PoW) system, something that Bitcoin still uses.

In this transition, users are required to stake at least 32 ETH worth roughly $70,000 USD as of March 5, rather than purchasing mining GPUs. Unlike mining, this method allows users to process transactions and gain rewards in ETH for doing so.

As of the current date, Pectra is still under development. Based on thorough testing, it should be pushed to the mainnet before long after it being successful on the Sepolia testnet.

The changes will be made in two milestones, the first milestone is expected to launch on Ethereum mainnet in March 2025, second milestone would be around late 2025 or early 2026 as per Decrypt.

Key Changes Users Can Expect

Pectra brings several enhancements that make Ethereum more accessible, cost-effective, and efficient for both users and network operators. Here’s a breakdown of the primary improvements:

• Lower Transaction Costs: Pectra aims to reduce fees, particularly for Layer 2 solutions like Arbitrum and Optimism. It’s akin to expanding a highway to alleviate traffic congestion, making transactions faster and more affordable.
• Streamlined Operations for Network Validators: Ethereum holders who validate transactions (validators) will find it easier to manage larger stakes. Previously, they had to handle individual transactions separately, but now, funds can be distributed more efficiently.
• More Accessible for Newcomers: With Pectra, transaction fees can be paid not only in ETH but also in other tokens, such as stablecoins. Wallets will also become more intuitive, reducing the need for complex settings and enhancing automation.
• Optimized Smart Contracts: Developers will benefit from faster and more cost-effective smart contract creation, which is particularly crucial for blockchain-based applications, games, and decentralized services.
• Future-Proofing the Network: The update lays the groundwork for further scalability improvements, ensuring Ethereum remains capable of handling increasing user and transaction volumes.

Some anticipated enhancements have been postponed to prevent overwhelming the network and to ensure a smooth transition through phased implementation.

How the Two Phases of the Update Will Roll Out

Phase One

Slated for launch this spring, the first phase introduces measures to lower fees on Ethereum’s mainnet and Layer 2 solutions like Arbitrum, Optimism, zkSync, and Starknet. Additionally, it incorporates Account Abstraction, a feature that allows users to cover transaction costs using tokens other than ETH, such as USDT, DAI, or USDC.

Traditionally, blockchain networks require fees to be paid in their native tokens. This differs from traditional banking systems, where fees are deducted in the same currency used for transactions. Currently, Ethereum users holding USDT must also possess ETH to cover transaction fees — Pectra seeks to remove this limitation.

Another major change in Phase One is the increased staking limit, which will rise from 32 ETH to 2048 ETH (approximately $4.5 million). This will enable validators to manage their holdings more effectively. Previously, staking required installing separate software for each 32 ETH batch, and additional earnings on accumulated rewards were not possible.

For instance, a validator staking 32 ETH and earning 4% annual interest (about 1.28 ETH) could not reinvest that 1.28 ETH within the system. They either had to leave it idle or withdraw it. The update eliminates these inefficiencies, allowing for compounding rewards.

Phase Two

Between late 2025 and early 2026, the second phase is set to increase data storage, and network speed will be targeted. Improvements to smart contracts will be achieved after the Ethereum Virtual Machine (EVM) is enhanced. Layer 2 solutions will also be upgraded to mitigate the impacts of gas traffic and make it cheaper.

Ethereum is facing gas price volatility alongside its Layer 2 networks. L2Fees claims that Ethereum has a transaction fee between $1 to $5, while Layer 2 networks charge $0.04 to $3 per transaction. During peak congestion, these fees can increase significantly, sometimes reaching double digits in USD.

Final Thoughts

The Pectra upgrade represents a major leap forward for Ethereum, bringing improvements that will enhance user accessibility, lower costs, and increase network efficiency. By making Ethereum more scalable, intuitive, and technologically advanced, Pectra sets the stage for the blockchain’s continued growth and long-term sustainability.