Ethereum's Pectra Upgrade Boosts Scalability, Introduces Smart Account Functionality

Ethereum, the pioneering network that introduced smart contracts to the world, is set to embark on a new chapter with the Pectra network upgrade, scheduled to go live today. The upgrade is expected to bring significant improvements to the Ethereum network, enhancing its functionality and scalability. Pectra is set to activate on the Ethereum mainnet at the start of epoch 364032, on May 7, 2025, at around 10:00 am UTC. The upgrade includes three main Ethereum Improvement Proposals (EIPs): EIP-7702, EIP-7251, and EIP-7691.

EIP-7702 introduces a groundbreaking feature that allows externally owned accounts to function as smart contracts. This means these accounts can cover gas expenses and payments using tokens other than Ether (ETH). EIP-7251 increases the validator staking limit from 32 ETH to 2,048 ETH, simplifying operations for large stakers. EIP-7691 enhances the number of data blobs per block, which is expected to improve layer-2 scalability and potentially reduce transaction fees significantly. Sergej Kunz, co-founder of the Ethereum decentralized exchange (DEX) aggregator 1inch, highlighted that Pectra introduces 'smart account' functionality at deeper protocol levels and improves Ethereum’s scalability through layer-2 solutions.

0xAw, lead developer at Base Ethereum layer-2 DEX Alien.Base, described EIP-7702 as a potentially great addition for Ethereum. He explained that account abstraction, which has so far struggled to gain traction due to the need to switch wallets, could benefit from this update. The positives include eliminating approval flows, not having to sign each transaction, segregated permissions and actions, and automations on behalf of the user. Following the update, developers will find it easier to implement these features, although account abstraction won't magically result in mass adoption, it does remove a significant barrier to entry for new users. It enables a Web2-like user experience by hiding many of the underlying complexities from users.

Ivo Georgiev, founder and CEO of self-custodial smart wallet Ambire, noted that the update will eliminate the need for infinite ERC-20 approvals and users won't need native currency like ETH to pay transaction gas fees. The user experience will be reworked completely, with permissions/delegations systems that let wallets give more limited abilities to apps, thus increasing their overall security. However, there are downsides. 0xAw pointed out that users will have one more dangerous thing they could sign, which would be even more damaging than an approval to wallet drainers. Mike Tiutin, chief technology officer at onchain compliance protocol PureFi, warned that drainers have proven that users will sign 'harmless' messages in cloned DApps, and this risk will now get worse with EIP-7702 expanding that trick from one token to the whole wallet. Georgiev, however, is more optimistic, stating that he is confident there will not be a tangible increase in risk, as the industry knows how to create a secure contract, especially with such a minimal scope as an EIP-7702 delegation.

Artemiy Parshakov, vice president of institutions at Ethereum staking service P2P.org, highlighted that EIP-7002 makes institutional staking much easier to integrate without taking too much risk. Staking service clients had to obtain a signed message from their staking service provider to be able to exit and store it securely for later. Until Pectra, stakers could not exit without the participation of the staking service provider. Those messages also couldn’t be generated until about 13 hours after starting staking — now this exit delay will be decreased to about 13 minutes.

Another notable upgrade is EIP-6110, which makes the execution-layer block carry data about new validator deposits to the consensus layer. Validator deposits are new validators joining Ethereum’s staking protocol. Until Pectra, consensus clients waited for block proposers to vote on a Merkle root that summarized deposits. Now, the execution-layer block includes a list of new verifier deposits. This sort of upgrade makes changes very deep into Ethereum’s consensus layer, and its introduction follows client bugs breaking the Holesky and Sepolia Ethereum test networks. Parshakov explained that his firm’s biggest concern is client bugs, but he trusts that respectable teams and the Ethereum Foundation are working together to prevent it from happening on the mainnet.

Ask Aime: "Will the Pectra network upgrade significantly enhance Ethereum's scalability and user experience?"