Close to a decade ago, Ethereum broke ground as the first blockchain supercomputer and enabled a myriad of smart contract use-cases. For the longest time, it has given direction to countless crypto projects – both as a home to many Ethereum-based dApps, as well as an industry leader for the L1 space.
Not long after, one of the co-founders of Ethereum – Gavin Wood – co-founded Polkadot. It was founded with the vision of providing a network that was more scalable and interoperable than other L1s which existed at the time.
Today, both projects stand as pioneers of the modular blockchain infrastructure stack. Even amidst some serious competition from L1s including Solana, the two networks continue to innovate. With major upgrades on the horizon, Ethereum and Polkadot reaffirm their roles as resilient and forward-thinking blockchain ecosystems in this ever-evolving industry.
In this edition of the Crypto Market Monitor, we will explore the two upcoming upgrades for Ethereum – Pectra, and Fusaka. We also dive into Polkadot’s 2.0 vision to understand how it aims to reinvent the Polkadot network.
Ethereum gears up for Pectra
Prague-Electra (dubbed Pectra) is the next big upgrade for Ethereum. It aims to tackle critical shortcomings in its Proof-of-Stake architecture while also enhancing its data availability and usability.
Among the key Ethereum Improvement Proposals (EIPs) in Pectra, EIP-7702 introduces a significant enhancement to user experience by enabling Ethereum accounts to seamlessly upgrade to smart accounts. This simplifies transaction flows, removing the long-standing need to sign multiple transactions – one each for approvals and swaps. This changes the UX game for end users on the chain. However, users benefitting from this will largely depend on wallet providers integrating this functionality effectively since most users transact on the chain through wallet provider services.
EIP-7251 is another major inclusion in Pectra, raising the validator staking limit from 32 ETH to 2048 ETH on which validators can earn their yield. This change is designed to mitigate Ethereum’s ever-growing validator set that puts a strain on the network. At the time of writing, the number of Ethereum validators has exceeded 1.7 million, surpassing the threshold at which networking inefficiencies emerge. By encouraging stake consolidation through a rise in staking limit, the EIP enhances network performance and reduces operational overhead for validators.
Pectra introduces several technical refinements and its impact would predominantly be felt by validator node operators rather than end-users. The upgrade is expected to go live on Mainnet in mid-March this year.
Fusaka Up Next
Following Pectra, the Fusaka upgrade is up next on the Ethereum developer community’s docket. Although its complete scope is yet to be finalised, two key components have already been earmarked: EOF (EVM Object Format) and PeerDAS (Peer Data Availability Sampling).
EOF introduces structural improvements to Ethereum’s Virtual Machine (EVM), which is the smart contract execution environment on the blockchain. The update makes smart contract execution more predictable, secure and efficient. These refinements will improve the developer experience on Ethereum.
PeerDAS, on the other hand, is a transformative leap for Ethereum’s data availability model. In 2024, Ethereum saw the proto-danksharding upgrade (EIP-4844) which introduced the concept of blob-carrying transactions. Blobs refer to a new type of data storage where large chunks of data can be temporarily stored on the blockchain, primarily used by Layer-2 rollups to significantly reduce transaction fees by offloading large data packets without burdening the main chain with permanent storage.
With Fusaka, expanding upon EIP-4844’s proto-danksharding mechanism, PeerDAS distributes blob data storage and verification across multiple nodes, similar to how peer-to-peer torrenting operates. According to Ethereum co-founder Vitalik Buterin, this approach could immediately double or even quadruple the number of blobs, with further scalability improvements in the long term. By decentralising data responsibilities, PeerDAS enhances Ethereum’s ability to accommodate Layer 2 scaling solutions efficiently.
Polkadot 2.0
While Ethereum refines its core architecture, Polkadot is undertaking an ambitious transformation with Polkadot 2.0, which reimagines how blockchain resources are allocated and scaled. The upgrade introduces three foundational enhancements: Async Backing, Agile Coretime and Elastic Scaling.
Async Backing is a pivotal improvement that reduces block time from 12 seconds to 6 seconds, significantly increasing transaction throughput. By enabling parallel transaction validation and expanding data storage capacity within each block, Polkadot effectively doubles its network efficiency. This optimisation draws parallels with traditional processor pipelining, where multiple instructions execute concurrently, maximising computational efficiency.
Agile Coretime represents a radical shift in how projects access and utilise Polkadot’s computational resources. Moving away from the static parachain slot auction model, Agile Coretime allows projects to purchase coretime (computational resources) in flexible increments. This dynamic resource allocation model enhances economic flexibility, optimising the network’s utilisation by permitting parachains to acquire computing power as needed. Furthermore, the ability to subdivide and trade these resources in secondary markets builds a more efficient and fluid ecosystem.
Complementing these enhancements, Elastic Scaling ensures that parachains can dynamically adjust their computational needs in response to network demand. By leveraging parallel computation, parachains can allocate multiple cores within a single relay chain block, effectively increasing their capacity.
Conclusion
The forthcoming upgrades to Ethereum and Polkadot put their distinct approaches to scalability and efficiency on display. Ethereum is addressing critical protocol limitations including its expanding validator set and the need for a simpler UX. Meanwhile, Polkadot is pioneering a flexible and dynamic resource allocation model, ensuring its ecosystem remains agile in a rapidly evolving industry. Both the networks are making strides toward greater decentralisation, improved performance and enhanced developer experiences. We see the roll out of these upgrades solidifying Ethereum and Polkadot as strong infrastructure players, laying the foundation for more developers to build on these networks that have stood the test of time.