Analysis of the Upgrade and Future Prospects of Ethereum (ETH)
Ethereum (ETH), as the second largest cryptocurrency in the world, has long held an important position in the blockchain industry with its strong smart contract ecosystem and developer community. However, market data on April 10, 2025, shows that ETH has recently shown weak price performance with significant declines. The focus will be on exploring Ethereum’s upgrade path and its future prospects, analyzing how these factors will affect its long-term value and market competitiveness.
The upgrade process and current status of Ethereum
Since its birth in 2015, Ethereum has continuously optimized its performance and functionality through multiple major upgrades. The following are key milestones and their impact on ETH:
1.
Upgrade: Ethereum has transitioned from Proof of Work (PoW) to Proof of Stake (PoS), reducing energy consumption by 99.95% and laying the foundation for future upgrades.
Impact: The merge reduced the issuance rate of ETH (from about 4.3% per year to 0.5%-1%), giving it a certain deflationary potential. However, since the market had already priced in this positive news, the price did not continue to rise after the merge.
2.
Upgrade content: EIP-4895 has been introduced, allowing stakers to withdraw locked ETH, enhancing the flexibility of the PoS system.
Impact: Activating more than 18 million ETH staking (accounting for about 15% of the total supply by early 2025) enhances network security, but may also lead to a portion of unlocked ETH flowing into the market, increasing short-term selling pressure.
Upgrade content: Introducing ‘Proto-Danksharding’ via EIP-4844 significantly reduces the transaction costs of Layer-2 and improves data availability.
Impact: The Cancun upgrade has driven the prosperity of the Layer-2 ecosystem (such as Arbitrum, Optimism), with transaction fees dropping to a few cents at one point, attracting more users. However, the high Gas fee issue on the mainnet has not been completely resolved yet.
Upcoming Pectra upgrade (expected by the end of 2025)
The next stage of Ethereum’s upgrade ‘Pectra’ (a combination of Prague and Electra) has been widely discussed in the community and is expected to be implemented by the end of 2025 or early 2026. This upgrade is seen as a crucial step for Ethereum to move towards ‘Full Sharding’ and peak performance.
Core content: EIP-7251 (increasing the maximum staking limit): Increase the maximum staking limit for individual validators from 32 ETH to 2048 ETH, reduce the operating costs of small stakers, and optimize network efficiency.
EIP-7594 (Data Shard Improvement): Further expand Danksharding to achieve a throughput of over 1000 transactions per second, competing with high-performance public chains like Solana.
Account Abstraction (EIP-7702): Simplify user experience, enabling ordinary wallets to support smart contract functionality, enhancing the usability of ETH in Web3 applications.
Gas fee optimization: Reduce mainnet transaction costs and narrow the gap with Layer-2 through dynamic pricing mechanisms.
Expected Impact:
- Performance Improvement: Pectra is expected to significantly improve the scalability of Ethereum, potentially increasing its mainnet’s transaction throughput from the current 15-30 TPS to several hundred or even thousands of TPS.
- Ecological Competitiveness: By reducing costs and enhancing user experience, ETH is expected to re-attract developers and users who have been lost due to high Gas fees, consolidating its leading position in the DeFi and NFT fields.
- Price Catalyst: If Pectra progresses as planned and fulfills expectations, it may become ETH price Key drivers of the rebound, especially in the current low market sentiment.
Future Prospects of Ethereum
Despite the recent significant decline in ETH, its long-term outlook still has multiple positive supports. The following is an analysis from technical and market perspectives:
Technical Advantages and Ecological Resilience
Ethereum has the largest developer community in the blockchain industry (according to the 2024 Electric Capital report, the number of ETH developers accounts for over 40% of the entire industry), providing a guarantee for its continuous innovation.
The rapid development of Layer-2 solutions (such as zkSync, Starknet) has boosted the actual throughput of the Ethereum ecosystem to thousands of TPS, compensating for the shortcomings of the main network. With the Pectra upgrade, the performance of the main network will further solidify this advantage.
The staking yield of ETH (currently about 3%-5%) has attracted a large number of long-term holders. By April 2025, the proportion of staked ETH to the total supply may be close to 20%, reducing the circulating supply.
Reshaping Market Narratives
Currently, ETH’s “smart contract platform” narrative is facing challenges from competitors such as Solana, but the Pectra upgrade may help reshape it into a new positioning as “efficient Web3 infrastructure”. If ETH can attract more Web2 users (such as gaming, social applications) through account abstraction and low-cost transactions, its user base may experience exponential growth.
External Catalyst
ETF impact: If the ETH spot ETF approved in 2024 attracts more institutional funds in the second half of 2025 (such as inflows reaching 50% of BTC ETF), it may drive the price up.
Macro turning point: if the global economy enters a rate-cut cycle by the end of 2025, the attractiveness of risk assets will increase, benefiting ETH.
Current Challenges and Short-Term Forecasts
Despite the bright prospects for upgrades, ETH still needs to overcome several challenges in the short term:
- Competition Pressure: Solana’s meme coin craze and cost advantage are diverting funds, ETH needs to accelerate its upgrade pace to cope with it.
- Market sentiment: Currently, a high proportion of holders are at a loss (possibly more than 50%). Without major positive news, selling pressure may continue.
- Price range: In the short term, ETH may fluctuate in the range of $1,800-$2,200. If it falls below $1,800, the downside target may be $1,400; if there are early releases related to Pectra, it may rebound to $2,500.
Conclusion
Ethereum’s upgrade roadmap demonstrates its determination to transition from performance bottlenecks to a highly scalable platform, especially with the upcoming Pectra upgrade, which is expected to inject new vitality into ETH by the end of 2025. Despite the current ‘very miserable’ price drop, long-term investors should pay attention to the progress of the upgrade and market turning points, and gradually build their positions. For short-term traders, it is advisable to wait for technical signals (such as RSI oversold or support level stabilization) before taking action. The future of Ethereum remains one of the most anticipated stories in the blockchain world.
