Fusaka Upgrade Boosts Ethereum Scalability But Fails to Drive Revenue Growth

The Ethereum Fusaka upgrade, implemented in December 2025, improved scalability by increasing weekly transaction volumes and decentralized exchange (DEX) activity.

Reduced gas fees led to a surge in stablecoin dust transactions, increasing address poisoning risks and complicating metrics analysis.

The upgrade also enabled optional zero-knowledge (ZK) proof-based block validation, aiming to reduce hardware and processing requirements for validators.

The Ethereum Fusaka upgrade marked a significant step in the network's evolution, increasing gas limits and introducing features like PeerDAS to enhance data handling and reduce transaction fees. These changes improved overall network efficiency, making it more viable for developers to build directly on Layer 1 rather than relying on Layer 2 solutions. However, while the upgrade boosted scalability, it did not immediately translate into substantial revenue growth for the network.

Despite these technical advancements, the network experienced a notable rise in stablecoin-related dust transactions. These micro-transactions, often below $1, accounted for 11% of all Ethereum transactions post-upgrade and were frequently linked to address poisoning attacks. Such activities highlight potential vulnerabilities in the network's Layer 2 scaling solutions, even as gas fees became more affordable.

The upgrade also introduced a shift toward ZK-based block validation, allowing validators to verify cryptographic proofs instead of re-executing all transactions locally. This change aims to reduce hardware requirements, lower costs, and increase accessibility for smaller validators. EIP-8025, part of Ethereum's L1-zkEVM 2026 roadmap, makes this proof-based validation optional, preserving flexibility for existing validation methods.

What Are the Key Technical Innovations in the Fusaka Upgrade?

The Fusaka upgrade introduced several critical innovations, including increased gas limits and the implementation of PeerDAS to reduce data load and stabilize transaction fees. These features improved both Layer 1 and Layer 2 operations, making Ethereum faster and more efficient. The upgrade also included blob targets and block-level access lists, which simplify node operations and further improve scalability.

One of the most notable innovations was the shift toward ZK-based block validation. By allowing validators to verify cryptographic proofs instead of re-executing all transactions, the network could reduce processing and storage requirements. This change is part of Ethereum's broader L1-zkEVM 2026 roadmap and aims to make validation more efficient and accessible.

What Are the Risks and Limitations of the Fusaka Upgrade?

While the Fusaka upgrade improved scalability and efficiency, it also introduced new risks. The reduction in transaction costs led to a spike in address poisoning attacks via spam transactions, inflating network activity metrics but harming user experience. These attacks, which involve sending small-value transfers to mislead users, have resulted in significant losses for victims.

Another limitation is that the upgrade has not yet driven substantial revenue growth for Ethereum. While the network's infrastructure is more robust, broader adoption and monetization remain challenges that require further innovation or incentives. Additionally, the effectiveness of proof-based validation depends on the speed and reliability of proof generation and the network's dependence on proof providers.

The introduction of optional ZK-based validation also presents challenges in implementation and adoption. Validators must choose between traditional execution clients or verifying zero-knowledge proofs, requiring a balance between security and efficiency. Ensuring the speed and reliability of proof generation is critical to the success of this new validation method.

What Is the Long-Term Outlook for Ethereum Post-Fusaka?

The long-term outlook for Ethereum post-Fusaka is cautiously optimistic. The upgrade has positioned Ethereum as a more efficient and scalable settlement layer, making it more attractive for developers and users. However, challenges such as address poisoning and the need for broader adoption must be addressed to realize the full potential of these improvements.

Institutional bullish projections for Ethereum, such as Standard Chartered's $7,500 target for 2026 and Tom Lee's $15,000 target for 2025, are predicated on the success of the Fusaka upgrade in driving adoption and reducing Layer 2 fees. These projections highlight the importance of continued innovation and incentives to attract users and generate meaningful financial returns.

Ultimately, the Fusaka upgrade sets the stage for Ethereum's long-term growth but does not immediately translate into widespread user adoption or revenue generation. The network must continue to evolve to meet the demands of developers, users, and investors.