What does the “Pectra” upgrade mean for ETH?

It’s been a tough year for Ethereum. The second largest cryptocurrency is down 45% since the start of 2025, and there’s been much debate over whether the Ethereum developer community — including prominent ETH co-founder Vitalik Buterin — has been doing enough to ensure the network’s success. 

But there are signs of hope, starting with the blockchain’s “Pectra” upgrade, which went live Wednesday. What could it mean for ETH? Here’s what you need to know.

What is the Pectra upgrade?

Pectra is the biggest network upgrade since last year’s Dencun update, which launched in March 2024, and the third major upgrade since Ethereum officially transitioned to a proof-of-stake network in 2022. 

Pectra, which is part of ETH’s years-long product roadmap, is focused mostly on reducing transaction fees (gas), speeding up transaction processing, and improving the blockchain’s data storage capabilities. 

Why is Pectra important? 

Pectra has been called “the most ambitious Ethereum upgrade yet,” with the upgrade featuring more formal improvements (11) than any other network upgrade to date. 

And its rollout comes at a critical time, with Ethereum facing stiff competition from newer competitors like Solana and Sui. The Ethereum ecosystem is also navigating the growth of layer-2 networks (like Base, Optimism, and Arbitrum) that are built on top of the Ethereum network and designed to help ETH handle more traffic. 

Given that L2s have been capturing an increasing share of ETH’s network activity and fees, one major focus of Pectra is boosting Ethereum’s ability to support L2 transactions and increasing network efficiency, which could see more revenue flow to the main Ethereum network over the long term.

What improvements will be launched? 

The Pectra upgrade touches all aspects of ETH, with improvements relating to the user experience, staking, and network scalability. 

Among the most direct improvements for users is flexible fee payments. Currently, Ethereum users must pay transaction fees in ETH. Upon Pectra’s launch, though, gas can be paid in other Ethereum-compatible tokens, including stablecoins like USDC and even memecoins.

Onchain apps and accounts will also be able to “sponsor” gas fees for users, potentially making it cheaper (or even free) to use them. 

Ethereum-compatible wallets will also get new capabilities, including batched transactions (which can reduce fees and network congestion) and smart contract compatibility (which will allow for new kinds of automated transactions).

And validators who stake their ETH will see the maximum stakeable amount rise to 2,048 ETH, up from 32 ETH, allowing them to compound their staking rewards.

What could Pectra mean for ETH’s price?

Major network upgrades don’t necessarily lead to short-term spikes for ETH. After the Merge upgrade in 2022, ETH’s price fell by around 13% a month later. A month after last year’s Dencun upgrade, ETH was down 15%. 

Currently, analysts have mixed views about how the Pectra upgrade might impact ETH’s price. 

Gabriel Halm, a research analyst at IntoTheBlock, believes Pectra could be a catalyst for ETH's price to break above the $2,000 level in May, in part due to a potential surge in user demand. 

Parataxis Capital cofounder Edward Chin is less certain. “It’s a welcome software upgrade that will improve the efficiency and utility of the network, but alone not likely to drive Ethereum’s price meaningfully higher,” Chin told Bloomberg. “Ethereum needs to find a way to drive further adoption and a reason for investors and users of the network to hold its token.”

What’s next for ETH?

Given ETH’s price struggles and criticism from investors and developers alike, the Ethereum Foundation has begun moving with more urgency in recent months.

Co-founder Vitalik Buterin said in a new blog post that ETH has become too complex. His new goal is to make Ethereum as simple as Bitcoin. “Even a smart high school student is capable of fully wrapping their head around and understanding the Bitcoin protocol,” he wrote.

Linh Hoang, Founder of TurboCoin AI Media & Gaming, posted on X last month that ETH’s simplified roadmap will focus on scaling and improving the user experience.