The Pectra Upgrade Was A Smash Hit.  Who Will Be First to The Party?

Well, it’s been about a week and the results are in:  Ethereum’s Pectra upgrade has been compared to the earth-shattering Merge that transformed the chain.  A smaller detail, but why “Pectra”?  Because it represents not one but two upgrades that were combined:  Prague and Electra.  The actual improvements are by all accounts just as impressive as its word play, and the very positive numbers are backing the excitement.

While Ethereum itself has focused on key features such as smart account wallet UX features, L2 scaling data storage blobs increased by 2x, and validator UX improvements going live, the full list of improvements are impressive.

So what’s new with Pectra, and who in the ecosystem was ready to take advantage of these changes?  Let’s take a look at Pectra, see what fast actors like P2P.org have done with the upgrade, and speculate on where this will take the Ethereum community.

Pectra Upgrade:  Smooth and Significant

First, it’s important to give credit where it’s due.  The upgrade has significant features, but the preparation and rollout have been very smooth so far, something that the giant Ethereum ecosystem greatly appreciates.  Web3 chain upgrades do not always have the best track record, and with this many billions on the line, held by millions of users, there is a lot of pressure on the team.  However, the upgrade proved that impossibly complex decentralized industries can successfully perform major updates to their systems without interrupting service.  When we compare that to the 63 year old programming language (yes, if COBOL was a person it could retire) that is holding together the international finance system, this says more than most people realize.

The upgrade itself focused on several key areas.  A big improvement was the functionality of staking, making it much easier for institutions to integrate.  The prior model required special permission from the staking service provider to exit, required proof of the permission, and could take up to 13 hours.  The upgrade removes this cumbersome step, the risk involved, and cuts down the waiting time from 13 hours to 13 minutes.  A major piece of this upgrade is the staking limit, or maximum validator staking balance.  What was a limit of 32 ETH has been raised to a whopping 2,048 ETH.  What’s the benefit of this?  For one thing, institutional players can now consolidate their risk by having fewer validation nodes, as they can get benefits for up to the max 2,048 ETH.  For all validators, the arbitrary rule of needing to stake in multiples of 32 was not helpful to anyone, and there wasn’t a great solution for those holding some remainder without making use of it.  Now, those extra ETH can be added to the stake to maximize rewards, encouraging more staking across the network.

Other key upgrades include better communication between execution and consensus layers, which improve the deposits/withdrawals of validators and makes the system run with fewer delays or other issues.  The account abstraction improvements are also notable, because they allow for smart contract like interaction with externally owned accounts, which makes for a simpler (and therefore less risky) interaction.

Early Birds Are Getting The Worms

The powerful validator-level features have also been noticed because the P2P.org platform was ready and waiting to launch their support for Pectra almost as soon as it launched.  This is a kudos to Ethereum for clearly communicating the upgrade with enough detail and time to help its supporting platforms adjust, and it’s also a kudos to the P2P team for planning well in advance, seeing how they could best leverage the upgrades, and launching a number of very promising tools.  The platform supports the features across dApp and API, including validator consolidation, auto compounding, partial withdrawals, and operator switching.  However, the platform has also released the industry’s first Validator Consolidation Calculator to show ETH stakers their personalized upside from consolidating validators, and provides this insight instantly.

Other platforms will likely be launching upgrades of their own to take advantage of Pectra’s upgrades, while at the same time looking for brand new use cases for what is being offered.  Keep your eye out for what will likely be a rush of upgrades, new features, and entirely new platforms supporting what Pectra is providing to the Ethereum community.

What Does The Market Say?

Given all this excitement, how far does this move the market’s needle?  Quite a bit, apparently.  According to Forbes, the capitalization of ETH jumped up by an eye-watering 42% only five days after the Pectra upgrade was completed.  This resulted in Ethereum rising to the 39th largest asset globally with a market cap that exceeded $322 billion.  The ETH futures jumped as well, showing that there was a great deal of interest, activity, and trading on Ethereum’s road ahead.

With only a week behind us, groups like P2P.org are showing what will be possible with Pectra.  The next few months should bring along those less proactive, but who can still bring solid ideas and implementation for the new and improved Ethereum.  Other ecosystems should take note and see what happens when you dial in your upgrades to provide precision improvements, and do so in a way that is so smooth the implementation itself is newsworthy.  With wins like this, the entire Web3 community can continue building both confidence and support among the TradFi crowd who are ready for something that is efficient, effective, and improving all the time.