Coin Metrics: The Aftermath of the Ethereum Pectra Upgrade

Original Article Title: New State of the Network: The After-Effects of Ethereum's Pectra Upgrade

Original Article Author: Tanay Ved, Coin Metrics

Original Article Translation: Shan Ouba, Golden Finance

Key Points:

Ethereum's Pectra upgrade was officially launched on May 7th, including increasing the maximum effective balance for validators from 32 ETH to 2048 ETH (EIP-7251) and doubling the blob space to support Layer-2 scaling (EIP-7691). Over 11,000 validators have already completed the merge, reducing the active validator count by around 16,000 while maintaining the overall staked ETH amount, leading to an average stake per validator of around 32.4 ETH. The number of blobs issued to Ethereum has increased from about 21,000 to about 28,000. Despite this, the demand for Rollup is still below the new target of 6 blobs per block. With decreasing costs, Layer-2 transactions continue to grow, with total blob fees almost at zero. If fees rise, there must be a reliance on Rollup to increase the demand for blobs.

Introduction

Ethereum's Pectra hard fork successfully launched on May 7th, bringing improvements to validator operations and staking flexibility, enhanced user experience through smart account upgrades, and increased capacity to support Layer-2 scaling. This upgrade, which included the implementation of 11 EIPs, is another milestone since the Beacon Chain launch, continuing Ethereum's roadmap following stages such as the Merge, Shapella, and Dencun.

This article analyzes the initial impact of the Pectra launch, focusing on how the increase in Ethereum's maximum effective balance and doubling of blob space have affected the staking mechanism and Layer-2 ecosystem. Additionally, we have tracked and analyzed key on-chain Ethereum metrics related to these changes.

Staking and Validators

One of the main goals of the Pectra upgrade is to optimize the validator operation process and enhance the flexibility of participating in the PoS system. A significant improvement is EIP-7251, which raised the validator's maximum effective staking balance from 32 ETH to 2048 ETH, potentially having a profound impact on the network's economic structure. This means stakers can now "top-up" existing validators or merge multiple validators into one to efficiently compound rewards.

Largest Effective Balance Increment (EIP-7251)

To understand the practical impact of this change, we can look at the specific process of validator merging:

· Update the withdrawal credential to type 0x02, indicating that the validator supports the merge operation;

· Select the source validator (the validator to be merged) and the target validator (used to receive the staked balance);

· Submit the merge request. Once submitted, the source validator will enter the exit queue (which is also used for voluntary exits and other merge operations), as the number of validators that can exit per epoch is limited;

· When the source validator reaches the withdrawable slot, it will exit from the active validator set, and its effective balance will be transferred to the target validator, thus completing the merge.

This mechanism enhances the capital efficiency of the PoS system, allowing large stakers to participate in network maintenance with fewer validator nodes, while also reducing hardware and operational expenses.

The above figure shows the number of validators that have successfully completed the merge (entered the active validator set) and the total amount of ETH merged. Since the Pectra hard fork went live on May 7th, as of May 25th, 11,150 validators have completed the merge, combining a total of 359,146 ETH.

Impact on Validators and Staking Economy

Due to the impact of merging and exiting, the total number of active validators has decreased by a net total of 16,344 since the Pectra upgrade. This change may also be influenced by EIP-7002, which streamlines and expedites the validator exit process. Since then, the number of active validators has begun to decouple from the total staked ETH, as more and more staking is concentrated in a few high-balance validators. The benefits of this concentration are not only reflected in the capital efficiency of stakers but also help alleviate network load and peer-to-peer communication pressure—issues that would become system bottlenecks with a large number of validators.

Currently, the average stake per validator has slightly increased from around 32 ETH to about 32.4 ETH, but the majority of validators still have an effective staked balance below 128 ETH. As more node operators merge their stakes to increase returns, we can expect this average to continue rising, and the distribution structure of validator stakes will also undergo changes.

Blob Expansion and Layer-2 Development

Blob Throughput Doubling (EIP-7691)

Another key goal of the Pectra upgrade is to further support Layer-2 scalability by doubling the blob throughput. The blob is a low-cost data availability solution introduced in the Dencun upgrade and is a key component of the Ethereum scaling roadmap.

With the introduction of EIP-7691 in Pectra, the target number of blobs per block has been increased from 3 to 6 (green line), and the cap has been raised from 6 to 9 (red line), significantly increasing the supply of blob space. This means that Layer-2 will have a larger transaction capacity and lower data availability costs.

Post-upgrade, the daily blobs uploaded to Rollup have increased from around 21,300 to about 28,000 (an average of 4 blobs per block), and the blob space used has also increased from around 2.7 GB pre-upgrade to about 3.4 GB. Hourly data shows that the average number of blobs per block is gradually approaching the new target of 6, indicating a growing demand for Layer-2 transactions.

However, due to the underutilization of blob space, blob fees are currently at very low levels. Data on blob distribution since the launch of Pectra shows that over 40,000 blocks have not included any blobs, while approximately 52,000 blocks have contained 6 or more blobs, indicating there is still room for further growth.

When the number of blobs submitted per block exceeds the target value (usually occurring during peak demand or network congestion), the blob fee market will be triggered, increasing the cost of blobs (which also means an increase in Layer-2 costs). Additionally, EIP-7623 has also been implemented in Pectra, which increases the cost of calldata to discourage unoptimized data storage methods, further encouraging Rollups to use blob space as a more economical data availability solution.

Impact on Layer-2

The increase in blob supply directly impacts the cost of Rollup. The average blob fee has further decreased, making it more predictable and almost free for Rollup projects like Base, Arbitrum, Optimism, etc. Therefore, the total blob fee for Layer-2 payments has dropped to $0.00001 (approximately 4 gwei). Lower costs mean that Layer-2 has a higher profit margin and can process more transactions on its chain.

Layer-2 solutions like Base and Optimism have seen an increase in throughput, with transaction volume surging from 8 million to 14 million after the Pectra upgrade. This trend is similar to the introduction of blob during the Dencun upgrade in March 2024. If Ethereum aims to extract more value from blob fees, Rollups need to progressively increase the usage of blob and push it towards a new block limit (6 blobs per block).

Conclusion

Pectra represents a significant step for Ethereum towards its goal of becoming a global settlement layer, demonstrating the ongoing evolution of the protocol. While not as flashy as past upgrades, this feature-rich hard fork has introduced greater flexibility and efficiency to the staking ecosystem, making it more forward-looking and institution-friendly, while laying a critical foundation for scalability and enhanced user experience (UX).

Despite early signs of validator consolidation and increasing blob usage on Layer-2, many anticipated economic shifts and scaling effects will still take time to fully materialize. Pectra may not have garnered much attention, but it is quietly paving the way for Ethereum's adoption and growth in the next phase.

Original Article Link