Ethereum Pectra: what will the Prague-Electra upgrade change and how to prepare?

The Ethereum Prague-Electra upgrade, also known as Pectra, represents a key milestone in the evolution of the Ethereum network. It focuses on improving functionality and scalability, which in turn has huge implications for the entire community.

Ethereum is more than just a cryptocurrency; it is the leading platform for decentralized applications (dApps) and smart contracts, and every upgrade to the code base impacts its resilience and reliability.

The growing popularity of Ethereum as a development platform for dApps is forcing more efficient management of network resources. Pectra aims to address the problem of high transaction costs and latency in the network, which becomes especially relevant in the context of a growing number of users.

Experiments and innovations in the field of blockchain technologies require changes and adaptations to existing protocols, and Pectra promises to make users’ and developers’ interactions with the network more comfortable.

From a community perspective, implementing such upgrades is important. Not only will the speed of transaction processing change, but the ability to use more complex smart contracts will open up new horizons for developers. The success of Pectra implementation will speak volumes about Ethereum’s readiness for future challenges and the project’s ability to remain one of the leading blockchain platforms on the market.

Content:

• Ethereum Prague-Electra (Pectra): what is this upgrade and what changes will it bring?
• Why is Ethereum Pectra divided into two parts and what stages are planned?
• The main features of the Pectra upgrade: new technologies and benefits for the Ethereum network
• How will Pectra affect ETH holders, validators, and developers?
• Ethereum Pectra vs previous upgrades: what are the key differences?
• How will the Ethereum blockchain structure change after the implementation of Verkle trees?
• What risks and challenges can the Pectra upgrade bring?
• What do ETH holders and node operators need to do before the upgrade?
• How will the Pectra upgrade affect the price of ETH and will it benefit investors?
• What are the prospects and outlook for the Pectra upgrade in the Ethereum ecosystem?
• Why does Pectra play a key role in the future of Ethereum?

Ethereum Prague-Electra (Pectra): what is this upgrade and what changes will it bring?

Prague-Electra, or Pectra for short, is an important upgrade to the Ethereum protocol that aims to improve overall network performance.

Prague focuses on changes to the network’s execution layer, while Electra affects the consensus layer. This hardfork will follow Dencun, a merger of the Deneb and Cancun upgrade that was rolled out to the mainnet in March 2024. Dencun lowered transaction fees for Ethereum-based Layer 2 (L2) solutions and improved the scalability of the underlying blockchain.

Pectra is a new milestone in the Ethereum development roadmap. Testing of the hardfork began on February 26 on the Holesky testnet, and it was deployed on the Sepolia testnet on March 5, which was supposed to mark the completion of preparations for the launch on the mainnet scheduled for March.

However, Ethereum developers later decided to delay the release of Pectra due to the discovery of deployment bugs in Holesky and Sepolia. The bugs were scheduled to be fixed by the end of the month, which theoretically pushes the release of the upgrade to April.

Ethereum developers postponed the launch of the Pectra hardfork due to testnet deployment errors

The upgrade was originally scheduled to launch in March this year

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Pectra includes many features and innovations that address existing issues such as transaction speeds, high fees, and overall network efficiency.

One of the main goals of Pectra is to optimize Ethereum’s consensus mechanism. The upgrade involves maximizing the speed of transaction processing, which reduces latency for users. This is especially important for decentralized applications, where the efficiency of direct communication can significantly improve the quality of user experience.

A significant aspect of Pectra is the integration of new algorithms that can improve network load balancing, which in turn allows more transactions to be processed simultaneously.

In addition, Pectra brings changes to the structure of smart contracts, simplifying their design and implementation. This is achieved by adding new software interfaces and standards that facilitate access to alternative solutions in decentralized finance (DeFi) and other applications.

Prague-Electra will thus enable developers to realize more complex concepts and projects on the Ethereum platform.

Why is Ethereum Pectra divided into two parts and what stages are planned?

Initially, the Ethereum Pectra upgrade was supposed to be released as a single upgrade, but the developers realized that it would be too complicated and risky. Therefore, they decided to split the upgrade into two parts:

• The first part (starting in 2025): the initial phase will focus on immediate updates such as account abstraction and improvements for validators. These changes will make Ethereum more user-friendly and increase staking rewards.

• The second part (expected in 2026): this phase will include more technical improvements such as the EVM object format (EOF), which will make smart contracts more efficient, and PeerDAS, which will improve scalability for L2 networks.

Source: DataWallet

The main features of the Pectra upgrade: new technologies and benefits for the Ethereum network

The Pectra upgrade includes a number of features that significantly improve the functionality and performance of the network. Let’s take a look at the main ones:

Account abstraction. One of its benefits is that users will no longer need to hold ETH to pay transaction fees. Instead, they will be able to pay with other tokens such as USDC or DAI. The update will also allow third-party services to sponsor user gas fees, meaning that in some cases, fees will be minimal or non-existent.

• Account abstraction. One of its benefits is that users will no longer need to hold ETH to pay transaction fees. Instead, they will be able to pay with other tokens such as USDC or DAI. The update will also allow third-party services to sponsor user gas fees, meaning that in some cases, fees will be minimal or non-existent.
• Smart contract efficiency. With Ethereum Improvement Proposals (EIPs) such as EIP-7692, the Ethereum Virtual Machine (EVM) will become more efficient and speed up the execution of smart contracts. This change will benefit both developers and users by reducing the cost and complexity of deploying smart contracts.
• Validator improvements. Ethereum operates in a decentralized system where validators help confirm transactions and protect the network. To participate, validators need to stake (block) 32 ETH, for which they are rewarded. However, there are no additional rewards for any number of ETH over 32. Pectra will introduce flexible withdrawal of cryptocurrencies from staking (EIP-7002) and increase the staking limit per validator from 32 to 2048 ETH (EIP-7251). This change will make the system more flexible and efficient, especially for individuals and companies with large amounts of ETH. In addition, Pectra will enable validator consolidation: large services, such as the Lido liquid staking protocol, will be able to run fewer validator nodes. This will help reduce the load on the Ethereum network and make it faster and less resource-intensive.
• Merkle trees for better data management. One of the technical improvements in the Pectra upgrade will be the implementation of Merkle trees, which will allow nodes to store less blockchain data. This will increase the speed and scalability of the Ethereum network by improving the way data is stored and validated. In other words, Merkle trees are a relatively new, more efficient way to organize data, reducing the amount of storage needed and speeding up transaction processing. This means that Ethereum could become faster and cheaper in the long run.
• Layer2 and PeerDAS solutions. Ethereum’s L2 solutions, such as Arbitrum and Optimism, are designed to process a large number of transactions outside of the Ethereum mainnet. They help reduce congestion and transaction costs (gas fees). Pectra will enhance these solutions with Peer Data Availability Sampling (PeerDAS) technology that optimizes data processing for L2 networks.

How will Pectra affect ETH holders, validators, and developers?

The Prague-Electra upgrade will have a significant impact on all participants in the Ethereum ecosystem, including developers, users, and investors. Each of these groups will benefit from the changes implemented with Pectra.

First of all, for developers, new tools and improvements are being introduced to speed up the process of creating decentralized applications. These tools make it easier to work with smart contracts and provide access to new network functions, which opens up new horizons for creating innovative solutions.

For users, the Pectra upgrade means faster and more cost-effective interactions with the network. Reduced transaction confirmation times and lower transaction costs when using Ethereum make the platform more attractive to a wider audience. As a result, users will be able to more easily make transfers, participate in DeFi protocols, and interact with other applications without fear of delays or high fees.

Investors will also feel the impact of the upgrade. Sustained growth in functionality and improved security levels could help increase confidence in the Ethereum ecosystem and, as a result, increase interest from institutional investors. A more stable and efficient platform is able to attract funds that can be invested in new projects and startups. This encourages more capital investment and further development of the ecosystem.

Validators and stakers will be able to manage large volumes of ETH more efficiently. Rewards will be available for amounts over 32 ETH on the blockchain, which was previously not possible. Combining validators will also simplify the management of staking and reduce the load on the Ethereum network.

The combination of all these factors makes Ethereum Prague-Electra an important step towards a more resilient and innovative network. The upgrade aims not only to improve the current state of the platform but also to shape its future, where all participants in the ecosystem can maximize the benefits of its capabilities and growth.

Ethereum Pectra vs previous upgrades: what are the key differences?

Ethereum has gone through several significant upgrades, each of which has played a different role in the evolution of the network. When comparing the Pectra upgrade to previous upgrades, such as the Istanbul and Berlin hardforks, there are a few key aspects that make Pectra stand out as an important milestone in Ethereum’s evolution.

Source: DataWallet

One of the main differences is the focus on scalability and transaction speed. Previous upgrades such as Istanbul made improvements to support new protocols and third parties, but they failed to fundamentally change the nature of the blockchain in terms of scalability.

Pectra, on the other hand, aims to address high fees and slow transaction processing, in direct response to the needs of users and developers.

In addition, Pectra introduces more advanced security and transaction management techniques. While Berlin has implemented new features to optimize smart contracts, Pectra aims to improve interactions and integrate advanced security algorithms. This ensures a high level of data protection and reduces the risk of fraudulent activities, which is relevant in an environment of increasing threats.

Another important aspect of the Pectra upgrade is its focus on developers. In previous upgrades such as Constantinople or Dencun, programming mechanisms and interfaces have been improved. However, the implementation of new tools and the simplification of smart contracts in Pectra can give developers many more opportunities to create and test new dApps. This makes Pectra a significant step forward in terms of access to resources and tools for developers.

In this way, Pectra not only continues the tradition of previous upgrades but takes it to the next level, providing improved capabilities and greater efficiency for all participants in the Ethereum ecosystem.

How will the Ethereum blockchain structure change after the implementation of Verkle trees?

No final decision has been made yet, but Ethereum developers plan to implement Verkle trees in the Osaka upgrade, the follow-up to Pectra. This is to improve data storage efficiency, reduce hardware requirements, and improve user experience through faster synchronization and smaller proof sizes.

Verkle trees are a method of organizing data in a protocol similar to Merkle trees. The key difference is the use of a special kind of hash function, known as vector commitment, to anchor information about subordinate nodes.

Vitalik Buterin describes this as a five-step process to improve the smart contract blockchain after Ethereum moves to a proof-of-stake (PoS) consensus mechanism in September 2022. The five stages are outlined in the roadmap: Merge, Surge, Verge, Purge, and Splurge.

Source: Ethroadmap

However, the roadmap was later updated to include a sixth phase called Scourge. In November 2022, Buterin added Scourge to address maximum extractable value (MEV) and resistance to censorship. By moving all state data into the Verkle structure, Ethereum will be able to store and prove state data much more efficiently.

Source: DataWallet

Verkle trees have become part of Ethereum’s post-Merge roadmap, they promise smaller proof sizes and lower hardware requirements for nodes. In a post on X, Vitalik Buterin noted:

“I’m really looking forward to Verkle trees. They will enable stateless validator clients, which can allow staking nodes to run with near-zero hard disk space and sync nearly instantly — far better solo staking UX.”

What risks and challenges can the Pectra upgrade bring?

The Pectra upgrade, despite its many benefits, also entails a number of risks that need to be considered. The transition to new algorithms and mechanisms can create challenges for both developers and users.

One of the main risks may be the possibility of errors and vulnerabilities during the upgrade implementation process. Technological changes are always associated with potential failures, especially when it comes to complex systems such as blockchain. The following could also become contentious:

• Validator consolidation risks. Consolidation of ETH fractions could reduce the number of validators, increasing centralization and single points of failure.
• BLOB capacity increase risks. Higher BLOB capacity could negatively impact decentralization and discourage individual participants.
• Data availability (DA) risks. Changes in data availability may increase transaction fees and affect the profitability of L2 networks in the short term.
• Complexity and scalability risks. Combining multiple EIPs and splitting Pectra into phases could lead to incomplete deployment and developer disagreements.
• Economic impact risks. Wallet upgrades that allow transaction fees to be covered by alternative tokens could reduce demand for ETH as the primary currency for fees.

In addition, security issues also remain a concern. New protocols and mechanisms may open up new attack vectors, and developers must take due care to ensure robust security.

The community plays an essential role and should be involved in testing and analyzing upgrades. All of these factors underscore the need for a cautious and measured approach to implementing the Pectra upgrade to minimize potential risks and successfully overcome emerging challenges.

What do ETH holders and node operators need to do before the upgrade?

Preparing for the Ethereum Prague-Electra upgrade requires careful consideration and strategic planning on the part of token holders and node operators. The importance of this preparation cannot be overemphasized, as it will impact the stability of network uptime and the security of user assets. Here are a few key steps to take to ensure a successful migration.

Source: Ethroadmap

First, token holders need to stay up to date with all the changes related to the upgrade. This means that users should closely follow announcements from the Ethereum development team, as well as new documents that explain the details of the upgrade. Knowing the nuances will allow holders to promptly react to possible changes and adjust their actions in the market. It is also recommended to familiarize yourself with the guides and recommendations for the upgrade, which may appear in official channels.

For node operators, software preparation and learning about the included EIPs will be key. The need to install a new version of the Ethereum client may require node operators to put significant effort into updating their software.

It is critical to keep an eye out for new software releases and follow the developers’ installation instructions. Since Pectra incorporates new technologies and algorithms, it is recommended to test on testnets before migrating to the mainnet. This will help identify potential problems in advance.

It is also worth considering the need to back up data and assets. Before upgrading, token holders need to save all significant data and keys to prevent potential losses. Setting up backups and properly storing sensitive information will help protect assets in case of unforeseen situations during the transition.

Finally, active participation in the community can be very beneficial. Discussing the upgrade with other users and node operators will help create a better understanding of possible issues and findings that may arise during the upgrade. Sharing experiences can be an important source of information for everyone in the ecosystem.

How will the Pectra upgrade affect the price of ETH and will it benefit investors?

With Pectra’s focus on scalability, staking efficiency, and usability, ETH holders could benefit from increased adoption and utilization of the network. If Pectra follows the trend of past upgrades, it could be a catalyst for ETH price increases ahead of the release.

Historically, Ethereum upgrades have had a positive impact on the ETH price. For example, the Chapella upgrade in April 2023 led to a 45% increase, and the Dencun upgrade in March 2024 sparked a 70% rally ahead of the rollout, demonstrating the optimistic potential of major upgrades.

Source: DataWallet

What are the prospects and outlook for the Pectra upgrade in the Ethereum ecosystem?

The Ethereum Prague-Electra upgrade opens new horizons for the future of the ecosystem, and its impact will be felt in various aspects of the network. Predictions about Pectra’s development typically center on three key areas: improving network performance, enhancing user experience, and empowering developers.

The first area relates to the obvious performance improvements. New transaction processing mechanisms are expected to significantly reduce confirmation times, which in turn will increase the number of users willing to use Ethereum’s services. The more active users, the more potential applications and services will arise within the ecosystem. This will create a network utilization effect, with each new integration contributing to the growth of other projects and initiatives on the platform.

The second direction relates to improving the user experience. Faster and lower-cost transactions are expected to make the platform more attractive to a wide range of users, including those who may have previously avoided using Ethereum due to high fees. As a result, access to decentralized applications will become more intuitive and easy, increasing user engagement and satisfaction.

The third area is related to expanding opportunities for developers. The Pectra upgrade provides new tools and interfaces that can facilitate the creation of even more innovative solutions. This opens the door for more complex and feature-rich smart contracts that could revolutionize various industries, including finance, logistics, and data management. In the long term, this could lead to Ethereum taking an even more dominant position in the world of blockchain technology.

Thus, the prospects for the Pectra upgrade look promising. The successful implementation of this upgrade could be an essential step towards strengthening Ethereum’s position as the primary platform for developing decentralized applications. If Pectra is able to meet the growing demands of users and developers, it will create a positive dynamic for further growth and development of the ecosystem as a whole.

Why does Pectra play a key role in the future of Ethereum?

With the rapid growth in interest and usage of decentralized technologies, this upgrade addresses the major challenges facing the network. Addressing current issues such as high transaction costs and processing delays allows Ethereum to remain competitive against the emerging blockchain technology market.

Importantly, improving performance and scalability will be a critical step for Ethereum to be able to handle the transactions of a growing number of users and applications. This upgrade not only improves network security but also contributes to a more robust environment for developers. More intuitive tools and features will greatly speed up the process of developing decentralized applications, which in turn will encourage innovation and the introduction of new ideas.

Thus, Pectra represents an influential stage in the evolution of Ethereum, which will help not only maintain but also strengthen the platform’s position in the market. Its successful implementation will help attract new users and projects, which will ultimately ensure sustainable growth and development of the ecosystem.

In conclusion, the Pectra upgrade serves as more than just a technical improvement; it is a necessary step toward shaping Ethereum’s future as the premier platform for decentralized solutions.