Ethereum Pectra Folk Plans To Optimize Blob Fees To Boost Network Scalability

Upcoming Ethereum's Pectra fork is bringing a different wave into the network. The blockchain developers have completed an Ethereum Improvement Proposal (EIP) that changes blob transaction dynamics.

The move aims to increase blob fees and boost the blockchain's scalability in the long run.

Ethereum Implement An EIP To Optimize Blobs Ahead Ahead Of Pectra Upgrade

Ethereum core developers are working on boosting the network's scalability ahead of its Pectra fork. They have implemented an Ethereum Improvement Proposal (EIP) to optimize blob-based transactions on the blockchain.

Christine Kim, the Vice President of Research at Galaxy Digital, took to X to post the progress after participating in the Ethereum All Core Devs" meeting.

quick update from acdc #144, devs have officially included eip 7742 in pectra, eip 7742 creates a mechanism for the CL to dynamically set the blob gas target+max,

with this eip, it's *likely* a blob count increase will also be included in pectra, and *unlikely* other changes to...

- Christine Kim (@christine_dkim) October 17, 2024

According to the post, the developers have included EIP-7742 in Pectra. This EIP will establish a mechanism for the Ethereum consensus layer to set the blob max and gas target values. Kim also noted that EIP-7742 will optimize the fixed blob count.

Kim stated: It's likely a blob count increase will also be included in Pectra, and unlikely other changes to boost scalability like a gas limit or slot time change will be included in the upgrade."

Moreover, last month, Vitalik Buterin, Ethereum co-founder, pointed out that the blob count is close to full capacity. He said such a situation would likely reduce scalability on the Ethereum network.

On GitHub, another Ethereum developer,Alex Stokes,highlightedan approach that could reduce rigidity on the currently fixed blob count. He said increasing the blob parameters by setting a flexible target value against the blob max will do the trick.

For emphasis, blobs are temporary, huge portions of data imbibed in Ethereum transactions. They usually help lower transaction costs for Ethereum layer-2 networks.

On March 13, Ethereum implemented blobs through EIP-4844 via the Dencun upgrade. The network plans to use EIP-7623 to free up more blob space. This proposal could reduce the maximum Ethereum block size to almost 1 megabyte from 2.7 megabytes.

Meanwhile, the Pectra update is set to occur either in late 2024 or early 2025.

Analyst Says Cheaper Layer 2 Networks Hurt Ether's Price

A prominent industry analyst and Head of Digital Asset Research at VanEck, Matthew Sigel, explored the impact of layer-2 networks on Ether's value.

First of all, the #ETH $22k price target is for 2030, whereas the Election Prediction was for 2024.

But I do agree that the changing fundamentals suggest a model update is in order.

We assumed a 50:50 split on TVL between Ethereum and L2s and 50:50 split on projected MEV (which... https://t.co/RB1ZRVzLaN pic.twitter.com/GiPoQT7IYA

- matthew sigel, recovering CFA (@matthew_sigel) October 17, 2024

Sigel noted that using layer 2s to scale Ethereum transactions led to a significant drop in the mainnet's portion of total network revenue. So, he believes that such a move will hurt Ether's price in the long run.

Further, Sigel pointed out that the revenue ratio of Ethereum and its layer 2s stood at 10:90 within the past four months.

Consequently, the research overturned VanEck's previous bullish forecast that Ethereum would rise over $22,000 by 2030. This prediction was based on a 90:10 revenue ratio for Ethereum and its layer-2 networks.

Sigel believes Ether's price will plummet by 67% to $7,330 if the current revenue split remains unchanged. He also said that the layer 2 networks are taking more value from Ethereum.

In addition, the analyst said the trend could get worse with revenue diversions. Sigel noted that one of Ethereum's key revenue drivers, Uniswap, plans to launch its layer 2 platform Unichain.

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