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    Ethereum’s Pectra fork adds dynamic blob fees to to improve L2 scaling

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    Ethereum developers plan to improve the network’s data handling in an upcoming update called Pectra. The EIP-7742 initiative intends to adjust Ethereum’s management of significant temporary data pieces known as blobs for more effective operation and increased scalability. However, Ethereum’s growing reliance on layer 2 transactions for faster, cheaper operations has affected its total network revenue share. This shift has influenced price forecasts for Ethereum, while plans from Uniswap to shift from Ethereum to its own layer 2, Unichain, may hit Ethereum’s revenue and price further.

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    Ethereum’s team of developers are going to start executing a plan to improve how the network handles large chunks of data, known as blobs, to enhance its overall capabilities in the soon-to-come Pectra update.

    This improvement, dubbed EIP-7742, aims to adjust how Ethereum deals with blobs for more effective operation. Not only does Christine Kim from Galaxy Digital advocate for this update, she is confident it will help Ethereum grow in capacity.

    These blobs are significant but temporary data pieces tucked into Ethereum transactions to reduce costs for level 2 transactions. Currently, the blob count is solid and fixed, but Ethereum’s co-founder, Vitalik Buterin, has cautioned that this could limit scalability.

    Kim suggests that we might see a blob count increase in the Pectra update, which can boost Ethereum’s scalability even more. However, other changes to boost speed and capabilities like adjusting gas limits or slot time may not be included in this update.

    The successful adoption of blobs took place via the EIP-4844 update which was implemented in March on the Dencun upgrade. Meanwhile, another proposal called EIP-7623 might offer more blob space by cutting down the max Ethereum block size from 2.7MB to around 1MB.

    In the grand scheme of things, Ethereum aims to reach 100,000 transactions per second through the mainnet and layer 2 blockchains with an overarching plan named “The Surge”.

    However, this pursuit of faster and cheaper transactions may come with a slight drawback. Over the past four months, Ethereum’s share in total network revenue has plummeted as layer 2 transactions have increased.

    In fact, Matthew Sigel from asset management firm VanEck has pointed out that this shift in revenue has forced them to change their bullish forecast on Ethereum’s price growth. If this trend continues, Ethereum’s price, which is currently $2,615, could drop rather than increase as initially expected.

    Finally, things might turn a bit sour for Ethereum as Uniswap, one of Ethereum’s significant sources of revenue, is planning to shift from Ethereum by creating its own layer 2, named “Unichain”. This move could further impact Ethereum’s revenue and subsequent price.

    Source: Cointelegraph

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