Pectra Upgrade: Elements That Revolutionize Staking on Ethereum

Ethereum's Relentless Upgrade Revolution

Ethereum, launched in 2015, aims to become a global blockchain, serving millions of users and applications. However, the network has faced many challenges, including slow transaction speeds, limited scalability, and high transaction fees when the network is overloaded.

To overcome these issues, Ethereum has made a series of important upgrades, focusing on three key elements:

• Expandability: Ethereum needs to process a large amount of transactions quickly and efficiently. Solutions such as Danksharding, Single-slot finality and Verkle tree are being implemented to optimize the scalability of the network.
• User Experience:Ethereum needs to become easier to use for everyone. For example, account abstraction will bring new features such as transaction pooling, account recovery, and allowing others to pay gas fees, making interacting with Ethereum simpler and more convenient.
• Security:Ethereum needs to ensure the safety of users' assets and data. Mechanisms such as Proposer-Builder Separation (PBS) and advanced encryption methods enhance security and prevent attacks.

To achieve its goals, Ethereum has outlined a clear upgrade roadmap, with each phase focused on addressing specific challenges:

• The Merge (9/2022):Ethereum moved from a Proof of Work (PoW) mechanism to a Proof of Stake (PoS) mechanism, which reduces energy consumption and enhances security.
• Shanghai (4/2023): Allows users to withdraw staked ETH, providing flexibility and incentives to participate in staking.
• Dencun (3/2024):Improved scalability and reduced layer 2 transaction fees through proto-danksharding.

Coming soon, Ethereum will roll out the Pectra upgrade, which will continue to focus on improving performance, scalability, and user experience. Specifically, Pectra will focus on:

• Enhance network performance:Pectra will optimize the performance of your validator, thereby increasing the speed of transaction processing and reducing latency.
• Improving user experience: Pectra will bring significant improvements in interface and features, making it easier for users to interact with decentralized applications (DApp) on Ethereum.
• Enhanced data delivery capability:Pectra will enhance the network's data access and processing capabilities, supporting the development of layer 2 solutions.

These enhancements will bring a faster and more seamless interactive experience with DApp, along with a more user-friendly staking process, meeting the growing needs of Ethereum users.

Ethereum Pectra Upgrade

As of 12/2024, Pectra consists of 10 improvement proposals (EIPs), each of which focuses on a different aspect of improvement:

• EIP 2537: Improving performance & security for blockchain applications.
• EIP 2935: More efficient blockchain history storage, which helps synchronize data faster.
• EIP 6110: Improving the process of sending money to validators.
• EIP 7002: More flexibility in staking withdrawals.
• EIP 7251: Allows more ETH to be staked (from 32 ETH to 2048 ETH).
• EIP 7549: Enhanced data processing on layer 2.
• EIP 7685: Extended functionality for smart contracts.
• EIP 7702: More user-friendly interface.
• EIP 7742: Separates the number of blobs between the consensus layer and the execution layer, optimizing data management.
• TBD: Reduce the cost of storing data on Ethereum.

Among them, EIP 6110, EIP 7002, EIP 7251, EIP 7549 and EIP 7742 will be implemented in the consensus class; EIP 2537, EIP 2935, EIP 6110, EIP 7685, EIP 7002, EIP 7702 and EIP 7742 will change Ethereum's execution layer.

The improved proposals of the Pectra upgrade bring major changes, affecting many aspects of the Ethereum network, including:

Improvements for Validator

Ethereum's Pectra upgrade brings some notable adjustments to validators — who play an important role in the operation and security of the network.

EIP-7251: Extending the Stake Limit

One of the most notable changes is EIP 7251, which allows validators to stake a maximum of 2048 ETH, instead of the 32 ETH limit as before.

The decision stems from the fact that the number of validators on the Ethereum network has increased significantly, exceeding 1 million and potentially posing a risk of overloading when the number reaches 1.4 million, according to simulations by Ethereum Foundation engineers.

Previously, a limit of 32 ETH was set to encourage decentralization and decentralization, allowing more people to participate in the operation of the network.

However, the development of liquid staking solutions (such as Lido and Coinbase) has caused the number of validators to increase rapidly, putting pressure on the system. EIP 7251 is expected to help alleviate this pressure by encouraging the consolidation of validators.

In addition to EIP 7251, Pectra includes several other improvements such as EIP 7549 (improved software efficiency for validators), EIP 6110 (enhanced security for sending ETH for staking), EIP 2935 (allowing access to information from previous blocks), and EIP 7685 (creating a framework that allows smart contracts to interact with the consensus layer).

Improving user experience (UX)

In addition to technical improvements, the Pectra upgrade also aims to improve the user experience (UX) on Ethereum, making the platform easier to use and convenient for both mainstream users and developers.

EIP 2537: Digital Signature Optimization

The first is EIP 2537, which aims to merge multiple user signatures into a single signature, reducing storage space and increasing transaction processing efficiency, making BLS signature verification more secure and efficient.

EIP 7002: More flexibility in staking withdrawals

Currently, users can participate in ETH staking in two ways: operating a validator themselves (solo-staking) or authorizing ETH to a third party for staking. However, this authorization carries the risk that the user must depend on the third party, if the third party commits misconduct that results in a fine, the user is solely responsible.

In that context, if a user wants to withdraw money from authorization services, a request must be submitted to the Execution Layer and pending processing and many other requests.

This authorization requires trust as the third party decides the deposit or withdrawal of ETH. EIP 7002 will simplify this process, allowing users to control withdrawals on their own without a third-party signature.

EIP 7702: Extend features for user accounts

EIP 7702 brings several new features to user accounts on Ethereum, including:

• Batching:Allows users to perform multiple transactions at the same time or to combine multiple small operations into a single operation.
• Sponsorship:Allows users to authorize others to pay a gas fee.
• Privilege de-escalation: Allows users to create sub-keys and set specific spending conditions. For example, only allow the use of a certain type of ERC-20 token or limit the balance spent per day

Improved data provisioning (DA) on Ethereum

The Pectra upgrade continues to focus on improving data provisioning (DA) on Ethereum, especially for layer 2 solutions. The focus of this effort is on adjusting the number of “blobs” — a new form of data introduced in the Dencun upgrade (EIP-4844).

Blob allows layer 2 solutions to store transaction data on Ethereum at a lower cost. Currently, each block on Ethereum can contain up to 6 blobs, with an average goal of 3 blobs per block.

Developer Francis Li proposed to increase this target to 5 blobs per block and limit the maximum to 8 blobs through EIP 7742. The aim is to reduce data storage costs for layer 2, thereby reducing transaction fees for users and increasing Ethereum's scalability.

However, the increase in the number of blobs also raises some concerns. Some developers claim that this may increase the computational resource requirements to operate the validator. This may result in some stand-alone validators (solo stakers) with fewer resources having difficulty meeting requests and being forced to shut down.

Impact of Pectra on user groups

Ethereum's Pectra upgrade is expected to bring positive changes to user groups ranging from network operators (validators) to mainstream users and application developers.

For validators/stakers, Pectra will make validator activation faster, helping them join the network and start earning rewards sooner. Pectra also offers flexibility in choosing the amount of ETH to stake (from 32 ETH to 2048 ETH).

The automatic pooling of rewards will help optimize profits for the staker, while reducing the cost of slashing will minimize the risk for them. In particular, Pectra gives the staker full control of its validator and the ability to exit staking independently without having to depend on the operator.

For ordinary users, Pectra brings new features that make the use of Ethereum more convenient. Users can bundle multiple transactions together to save time and gas fees.

Developers will also benefit from Pectra with improvements to the Ethereum Virtual Machine (EVM). Smart contract coding and deployment will become faster and cheaper, helping to create efficient decentralized applications (dApps). Pectra provides developers with a variety of tools to build complex and innovative applications on Ethereum.

Pectra is expected to drive the development of Ethereum, the platform that currently has more than 279 million Ethereum wallets globally. This upgrade will bring improvements in scalability, security, and user experience, and lay the foundation for future developments.

Mekong Testnet

Initially, Pectra was planned to be implemented simultaneously, but the developers found this too complicated and risky. Therefore, they decided to divide the upgrade into two parts:

• Phase 1 (early 2025):Focus on immediate improvements such as Account Abstraction (account abstraction) and Validator upgrade (more convenient staking process). This makes Ethereum more user-friendly.
• Phase 2 (expected 2026):Focus on more complex technical changes, for example EVM Object Format (EIP 6110) makes smart contracts work more efficiently and PeerDAS (EIP 7549) enhances layer 2 scalability.

In preparation for Pectra, the Ethereum Foundation launched the Mekong testnet on November 7, 2024. The Mekong is like a trial version of Ethereum, where developers, app builders and users can experience Pectra's new features in a secure environment before they are officially implemented on the main network.

Mekong now integrates most of Pectra's EIPs, including EIP 7702 (more user-friendly interface), EIP 7251 (staking more ETH), EIP 6110/EIP 7002 (improved staking process). With 110 Node and 100,000 validators, the Mekong is powerful enough to perform large-scale tests.

However, the Mekong is still in the process of being finalized and some EIPs, for example EIP 7742 (related to the “blob”), have not yet been integrated.

Expected to be operational in a few months, the Mekong will provide valuable data for perfecting Pectra. After the Mekong, other public testnets will be deployed before Pectra officially launches on the Ethereum main network.

Interestingly, the name “Mekong” was chosen in honor of the Mekong River, where this year's Devcon event took place. This is the tradition of naming testnets after the Ethereum Foundation's Devcon hosting location.

The Ethereum Foundation encourages the community, especially developers, to participate in testing the Mekong, especially features related to user experience, and contribute comments to finalize the Pectra upgrade.

Next steps after Pectra

After Pectra, Ethereum will continue to be upgraded with the next update called Fusaka, which is scheduled to launch in late 2025. Fusaka will be a combination of two smaller upgrades, Osaka (execution class) and Fulu (consensus class).

One of Fusaka's notable highlights is the focus on the “verkle tree”. The technology is expected to be an important step towards “statelessness” for Ethereum.

Statelessness allows nodes to participate in transaction authentication without storing the entire blockchain history, which greatly reduces storage capacity, speeds up synchronization, and expands the participation of small network nodes.

In addition, Fusaka will likely include other improvements such as:

• Increase the gas limit:The gas limit is the limit of the amount of computation that a block can handle. Increasing the gas limit will allow Ethereum to process more complex transactions in each block.
• Improved EVM performance:Continue to optimize the Ethereum Virtual Machine (EVM) to speed up processing and reduce transaction costs.
• Enhance the user experience: Improved user interface and support tools to make it easier for users to interact with Ethereum.

However, the exact contents of Fusaka are still unknown and will be announced in more detail by the Ethereum Foundation when Pectra is officially rolled out.