Ethereum upgrades may improve tech, but not investor confidence: Binance Research

Ethereum is preparing for two major upgrades, Pectra and Fusaka. However, these upgrades do not meet the underlying concerns with its tokenomic.

Ethereum (Eth) should deploy two major upgrades this year, Pectra and Fusaka. However, these upgrades occur at a time when Ethereum is under the constant threat, a research report by Binance, published on April 16, States.

With the next upgrades, improvements come to the availability of data, to the expanded support for layer 2 chains and to wallet improvements. However, investors continue to express their concerns about value accounting. More specifically, some of these upgrades seem to promote layer 2 networks on the own generation of Ethereum income.

Ethereum improves, but the value capture is lacking

On the one hand, the upgrading of Petra, scheduled for May, will introduce more blobs. Blubs allow layer 2 networks to publish more data in Ethereum, which allows them to reduce their costs even more. However, this also means that Ethereum’s income by transaction will decrease.

The upgrade will also increase validators from 32 ETH to 2,048 ETH and will introduce portfolio improvements to improve the user experience. Although these changes are technically significant, they do not accumulate directly for ETH holders.

The upgrade of Fusaka, scheduled for later this year, will make improvements to the Dark Sharding experience and to the developer. In particular, the introduction of the Ethereum object format should make smart contracts easier to write, potentially reducing errors and security risks.

The upgrades position Ethereum to become the fundamental infrastructure of the future of Web3. By empowering layer 2 networks, Ethereum aims to place itself in the center of a wider web 3 ecosystem. However, this offers little comfort to ETH holders, who are looking for value and yields.

In particular, trading at $ 1,567, Ethereum has lost more than 60% of its value since its summit in December of $ 4,106. A drop in the volume of the network. Largely due to the rise of L2S, led to a drop in the generation of negotiation costs. Consequently, the ETH becomes more inflationary, which raises concerns among investors.