As the cryptocurrency market continues to struggle through a period of price stagnation and volatility with no clear path forward, all eyes are on the highly anticipated Pectra update for the Ethereum (ETH) network.
Scheduled for the first quarter of 2025, this major update is attracting the attention of confident analysts who believe it could be the catalyst that drives the price of Ethereum to up-to-date highs.
A Potential Breakthrough for Ethereum?
With the Pectra update, Ethereum’s prospects are looking more confident, according to DeFi Ignas, a decentralized finance (DeFi) researcher.
In the recent social media post Analyzing this upcoming milestone for the network, Ignas says the update combines improvements from Prague (execution layer) and Electra (consensus layer) and represents a holistic advancement for the network.
In recent years, Ethereum has experienced several transformational upgrades, including the move to proof of participation (PoS), introducing ETH burning mechanisms and reducing gas fees by implementing blob data objects.
However, the researcher believes that the Pectra update brings up-to-date features, with the notable change being the Account Abstraction feature.
Historically, the implementation of account abstraction has been restricted due to the complexity of interacting with decentralized applications (dApps) via astute contract accounts, leading to missed opportunities such as airdrops.
With the introduction of the EIP-7702 standard, external exchange accounts (EOA) gain enhanced features similar to astute contract-based wallets, allowing for greater flexibility during transactions.
Notable benefits include the ability to bundle transactions, facilitate sponsorship transaction feesand effectively manage permissions, bridging the gap between EOA and astute contract-based wallets.
According to Ignas’ analysis, this development will streamline fund management, automate processes, and improve dApp interactions without requiring users to directly hold ETH, enabling seamless operations such as validation and exchange in a single transaction.
Technical progress and cost savings
The Pectra upgrade also brings performance improvements for validators, allowing 40 ETH to be staked at a time, which reduces operational costs and increases rewards.
Additionally, enhancements such as Peer Data Availability Sampling (PeerDAS) promise to reduce the cost of Layer 2 (L2) solutions by improving data verification processes.
The Ethereum Virtual Machine (EVM) will also undergo significant improvements with eleven EIPs, simplifying astute contract development, reducing costs and increasing overall efficiency.
Technical improvements such as BLS12-381 curve precompilation, stateless clients, and credentials, Ignas says, will further improve the Ethereum ecosystem for both developers and users, paving the way for a more seamless and user-friendly experience.
Ignas states that the Pectra update symbolizes a significant step forward for Ethereum, promising expanded functionality, cost-efficiency, and an improved user experience that will likely propel the network and ETH Price to up-to-date heights in the coming year.
ETH Price
Despite the upcoming bullish update for the network, there are still several months left until its launch, as the ETH price is still unable to regain the key levels lost earlier this month, when the token dropped 25% to a one-year low of $2,110.
At the time of writing, ETH is trading at $2,570, unchanged from Monday’s price but down nearly 3% in seven days. ETH is still 45% below its all-time high of $4,878 during the 2021 bull run.
While the rating upgrade heralds significant progress in the coming year, it will be crucial for bullish investors to reclaim the $2,600 level in the coming days to improve ETH’s outlook for the coming months and prepare for a retest of the $3,000 resistance level.
Featured image from DALL-E, chart from TradingView.com
