Ethereum, one of the leading blockchain networks globally, continuously upgrades its infrastructure to maintain its competitive edge.
This is particularly important given recent criticisms, with some arguing that Ethereum’s high transaction fees have made it less appealing for users.
In response, Ethereum’s developers have been working on a series of updates to improve user experience and scalability. One of the latest, and most highly anticipated, is the Pectra Upgrade, which has been the subject of significant discussion within the Ethereum community.
Pectra Split into Two Phases
After weeks of deliberation, Ethereum developers have made the official decision to split the Pectra Upgrade into two separate phases.
This decision was confirmed on 19 September 2024 during the 142nd All Core Devs meeting. By splitting the upgrade, the team hopes to make the testing process more manageable and reduce the potential for bugs during implementation.
The first phase of the Pectra Upgrade will include eight Ethereum Improvement Proposals (EIPs), the most notable being EIP-7702. This proposal, spearheaded by Ethereum co-founder Vitalik Buterin, is designed to enhance wallet functionality.
It will allow traditional wallets to temporarily function as smart wallets during specific transactions, making it easier and more efficient for users to interact with Ethereum’s smart contract system.
Developers have set an early 2025 target for the rollout of the first phase, although this timeline is still tentative.
The community has high hopes that this initial phase will address some of the network’s longstanding issues, such as high gas fees, which have long been a source of frustration for Ethereum users.
Meanwhile, the second phase of the Pectra Upgrade will be more complex, featuring updates like PeerDAS (Peer Data Availability Sampling) and the EVM Object Format (EOF).
PeerDAS aims to improve data availability for rollups, reducing the risk of cost spikes when network demand increases. EOF, on the other hand, will introduce significant changes to Ethereum’s smart contract programming environment, potentially making it easier for developers to create and manage contracts.
However, this also comes with the risk of disrupting existing smart contracts, making the second phase particularly delicate.
Positive Sentiment and ETH Price Movement
News of the Pectra Upgrade split has been met with optimism from investors and Ethereum users alike.
The decision is seen as a proactive step by developers to accelerate the rollout of much-needed features without waiting for the more complex proposals to be ready. This has sparked positive sentiment in the market, reflected in Ethereum’s recent price movement.
In the days following the announcement, the price of ETH has risen by approximately 5%. This uptick has brought renewed confidence among investors, many of whom have been waiting for a positive catalyst to boost Ethereum’s market performance.
However, it is important to note that the increase in inflow volume suggests that some large holders, or “whales,” might be preparing to sell, which could put downward pressure on the price.
On a more positive note, outflow volume has also begun to rise, indicating that many ETH holders are choosing to hold onto their assets in anticipation of further gains.
While this suggests that selling pressure could be balanced out by those willing to hold, traders should remain cautious, as the risk of a price correction remains high. The recent upward trend might stall over the weekend, and it is possible that ETH could see a slight pullback.
That said, Ethereum’s medium-term outlook remains promising, especially with the Pectra Upgrade on the horizon. For now, investors and traders are advised to manage their risk carefully and stay alert to market movements as the situation unfolds.
Conclusion
The decision to split the Pectra Upgrade into two phases marks a significant milestone for Ethereum’s development.
With improvements to wallet functionality and key features like PeerDAS and EOF on the way, Pectra promises to bring substantial changes to the network.
The positive sentiment surrounding this announcement has already driven up the price of ETH, though potential corrections could be on the horizon.
For investors, careful risk management is essential as they navigate the current market conditions and prepare for what could be a transformative period for Ethereum.
