Ethereum's 60M Gas Limit Expansion and the Implications for Base-Layer and Layer-2 Scalability

Ethereum's strategic capacity upgrades in late 2025, culminating in the Fusaka hard fork, represent a pivotal inflection point for the blockchain's scalability and institutional adoption. The recent increase in the block gas limit to 60 million gas units-a 33% jump from 45 million-has already demonstrated Ethereum's ability to adapt to growing demand while maintaining decentralization and security. This expansion, coupled with the Fusaka upgrade's introduction of PeerDAS and Blob Parameter Only (BPO) forks, positions Ethereum to address long-standing scalability challenges and solidify its role as a global settlement layer for decentralized applications (dApps) and institutional infrastructure.

The 60M Gas Limit: A Foundation for Scalability

The block gas limit increase to 60 million gas units, implemented on November 25, 2025, was a coordinated effort supported by over 513,000 validators, surpassing the required consensus threshold. This adjustment effectively doubles Ethereum's base-layer capacity compared to a year prior, enabling more transactions per block, including token transfers, smart contract executions, and decentralized exchange swaps. The move aligns with Ethereum's broader scaling roadmap, which prioritizes both Layer 1 (L1) and Layer 2 (L2) efficiency.

For context, Ethereum's layer-2 networks-such as Arbitrum, Optimism, and Base-already process over 24,000 transactions per second (TPS) according to recent reports. The 60M gas limit expansion ensures that Ethereum's base layer can handle increased throughput without compromising decentralization or security. This is critical for institutional adoption, as it reduces congestion during peak periods and lowers transaction costs, making Ethereum a more viable platform for enterprise-grade applications.

PeerDAS and BPO Forks: Enhancing Data Availability and Flexibility

The Fusaka upgrade, scheduled for December 3, 2025, introduces PeerDAS (EIP-7594), a data availability sampling protocol that allows validators to verify blob data availability through sampling rather than downloading entire blobs. This innovation reduces bandwidth requirements by up to 80%, enabling Ethereum to process 48–72 blobs per block-a significant leap in data throughput for L2 rollups. According to whale alerts, for institutions, this means lower operational costs for validators and more efficient data handling for L2 solutions, which are expected to see transaction fees drop by 40–60%.

Complementing PeerDAS are BPO forks, which allow incremental increases in blob capacity without requiring full network-wide hard forks. For example, the first BPO fork will raise the blob count from 6–9 to 10–15 per block, with subsequent forks further expanding capacity. This modular approach ensures Ethereum can scale dynamically as L2 adoption grows, avoiding the risks of centralized coordination during upgrades.

Institutional Adoption and Economic Incentives

Ethereum's strategic upgrades are not just technical achievements-they are catalysts for institutional adoption. The Fusaka upgrade introduces EIP-7918, which sets a reserve price for blob gas fees, creating stronger economic ties between L2 usage and fee revenue for ETH holders. This mechanism ensures that as L2 networks process more transactions, a portion of the fees flows back to Ethereum's base layer, enhancing value accrual for ETH.

Institutional interest in Ethereum has already surged, with over 43% of circulating ETH held by large institutions, such as Goldman Sachs, Millennium, and Jane Street. According to market reports, the Bhutan government's recent staking of 320 ETH with Figment and BlackRock's Ethereum ETF reporting 31,000 ETH inflows in a single session underscore growing confidence in Ethereum's economic model. These developments align with Fidelity Digital Assets' analysis, which highlights Ethereum's maturation into a "cash-flowing platform" with growing pricing power.

Long-Term Value Accrual and Market Projections

The combined impact of the 60M gas limit expansion and Fusaka's innovations is expected to drive Ethereum's long-term value. By reducing gas fees and improving throughput, Ethereum becomes more competitive against other Layer 1 blockchains like Solana and Avalanche according to market analysts. Analysts project that if the upgrade delivers as promised, Ethereum could see a move toward $4,270 by year-end 2025 and potentially $8,000–$14,000 by 2026, assuming continued institutional adoption and ETF inflows.

Moreover, Ethereum's focus on scalability and economic sustainability-as emphasized by co-founder Vitalik Buterin-positions it to evolve into a global settlement layer for decentralized finance (DeFi), gaming, and enterprise applications. The introduction of Verkle Trees in Fusaka further enhances this vision by reducing storage requirements and improving verification speeds for light clients, making Ethereum more accessible for mobile and institutional users.

Conclusion: A Catalyst for Institutional Trust and Growth

Ethereum's 60M gas limit expansion and Fusaka upgrade are more than technical milestones-they are strategic moves to align the network with the demands of a maturing blockchain ecosystem. By improving base-layer capacity, enhancing data availability, and creating stronger economic incentives for ETH holders, Ethereum is laying the groundwork for sustained institutional adoption and long-term value accrual. As the network transitions into 2026, the success of these upgrades will likely determine whether Ethereum solidifies its dominance in the Layer 1 space or faces increased competition from emerging protocols. For investors, the key takeaway is clear: Ethereum's ability to scale without compromising decentralization or security is a compelling narrative for both short-term momentum and long-term growth.