The Ethereum network’s capacity to handle more transactions increased further late Monday as validators agreed on a gas limit increase for the first time since late 2021, marking a significant milestone in the network’s Merge era.
The gas limit on Ethereum reached nearly 32 million gas units as of Tuesday morning, with a maximum expected capacity of 36 million units. This adjustment is noteworthy, given that the last substantial increase occurred in 2021, when the limit surged from 15 million to 30 million gas units.
This change was implemented after a majority of validators supported the adjustment, which was enacted automatically without necessitating a hard fork—a split in the network commonly associated with major upgrades.
In the context of Ethereum, gas refers to a unit that quantifies the computational effort needed to carry out operations like transactions or smart contract executions. Each operation comes with a gas cost, ensuring that users compensate for the precise amount of computational resources their actions necessitate.
The gas limit signifies the total amount of gas permissible in a block. When the transactions in a block exceed this cap, they may either be postponed to the subsequent block or compete for inclusion based on the gas price offered.
By raising the gas limit, Ethereum can accommodate an increased volume of transactions or more intricate operations within each block. This enhancement contributes to improved network throughput, facilitating the development of advanced decentralized financial (DeFi) applications while minimizing downtime.
A higher gas limit additionally alleviates congestion during peak times, reducing costs for users and averting migration to more affordable alternatives like Solana. Enhanced network utility can foster greater investor demand for ETH, potentially stabilizing the world’s second-largest token, which has seen a decline in investor interest over the past year.
On Sunday, Ether (ETH) dropped to its lowest point against Bitcoin (BTC) since March 2021, as the world’s second-largest token extended its losses versus its more prominent counterpart. One ether fell to 0.03 BTC in January, nearly 50% lower than a year ago, as Bitcoin surged in response to the political climate surrounding U.S. President-elect Donald Trump’s inauguration, as reported by CoinDesk.
The exchange rate for the two tokens, traditionally referred to as the ETH/BTC ratio, peaked above 0.08 in 2022, yet ETH’s value proposition has been on a downward trajectory ever since.
Looking ahead, the upcoming Pectra upgrade is anticipated to double the capacity of layer-2 networks—blockchains that operate on top of Ethereum—by increasing the blob target from 3 to 6. “Blobs” represent sizable data packets utilized by layer-2 networks to retain data for a designated time period, with 3 blobs currently included in each Ethereum block as of Tuesday.
