According to new findings from Binance Research, Ethereum’s upcoming Pectra and Fusaka upgrades could mark a turning point for the network’s scalability and long-term potential in crypto payments.

Despite Ethereum being a highly secure and widely used blockchain, the report warns that Solana and BNB Smart Chain are gaining ground in decentralized exchange (DEX) volumes and fees due to faster speeds and lower costs.

Scalability and Usability Improvements

Binance attributes this trend to Ethereum’s current limitations, including high fees, slower transaction speeds, and a fragmented ecosystem of developers and liquidity. The rise of Layer 2 (L2) networks has also partly contributed to reduced value capture at its base layer, further weakening the network’s overall position.

The Pectra upgrade, now scheduled for May 2025 after delays in testnet deployment, is expected to deliver core improvements that could ease these challenges. It merges the Prague execution layer with the Electra consensus layer and incorporates 11 Ethereum Improvement Proposals (EIPs).

Among these is EIP-7251, which increases the maximum effective staking balance from 32 ETH to 2,048 ETH, helping to manage the load of over one million active validators. EIP-7691 will expand blob capacity, allowing more data to be posted to the mainnet while keeping costs low.

EIP-7702 introduces account abstraction, enabling externally owned accounts to function more like smart contract wallets while offering features such as bundled transactions and gas sponsorship.

The updates are designed to increase scalability and usability, potentially making Ethereum more practical for high-volume crypto payment use cases. However, Binance notes that none of these code changes directly aim to strengthen its monetary narrative or improve its censorship resistance.

Fusaka, scheduled for late 2025, will also enhance Ethereum’s scalability. It introduces PeerDAS via EIP-7594, a key step toward full danksharding, which is crucial for improving the blockchain’s data availability.

Additionally, the Ethereum Object Format will simplify smart contract creation while reducing execution overhead and providing developers with a safer and more efficient experience.

Data Availability and ETH’s Value Concerns

Despite these developments, Binance points out that Ethereum’s role as a data availability layer remains under competitive pressure from platforms like Celestia, EigenDA, and NearDA, which currently outperform it in raw throughput and cost.

While Ethereum offers superior security, concerns persist about its ability to sustain ETH value accrual as it relies more on L2s. The research also notes that proposed solutions, such as repricing the blob market or requiring L2s to contribute fees, are uncertain, and the factor is also not prioritized in the ecosystem’s roadmap.