The Ethereum Fusaka upgrade significantly boosted operational activity within the network, according to a recent report from the banking giant JPMorgan to its clients. This technical development, which seeks to optimize data processing, generated an immediate decrease in transaction fees, raising the number of active addresses while the market cautiously observes the sustainability of this long-term structural growth.
This continuous improvement process, whose implementation follows the previous event called Pectra, represents a technical effort to optimize the global performance of the main decentralized infrastructure. However, analysts led by Nikolaos Panigirtzoglou warn that, historically, these successive upgrades have failed to sustain financial activity for a prolonged period, facing a liquidity fragmentation that affects the stability of the digital ecosystem today.
By allowing a larger volume of information per block, this technological improvement, known as the Ethereum Fusaka upgrade, managed to significantly reduce the user’s operating costs. This phenomenon occurs after a period of congestion where activity migrated massively towards secondary scalability solutions, forcing the main network to seek mechanisms to recover the transactional efficiency lost due to the growing competition from high-speed external protocols.
Technical advancement versus the massive migration towards second-layer networks
However, the pressure exerted by protocols such as Base, Arbitrum, and Optimism continues to fragment liquidity, weakening the dominant position of the current main chain in the global financial market. The report points out that Base currently generates the majority of the total operating revenue, while specific applications divert capital towards their own decentralized blockchain infrastructures, affecting the centralization of cryptographic capital flows.
Additionally, competition from faster and cheaper networks like Solana, combined with the fading of speculative interest in modern digital assets, clouds the future outlook for the network. This capital fragmentation, driven by strategic movements from platforms like Uniswap, has caused a decrease in locked value within the protocols, seriously impacting the confidence of institutional investors regarding future performance.
Will Ethereum overcome the liquidity fragmentation imposed by layer-2 networks?
As a direct consequence of these structural changes, fee burning has decreased drastically, resulting in a constant increase in the available circulating supply of ether. This dynamic, coupled with persistent headwinds, makes the financial institution doubt a lasting trend reversal, despite the recent spike in activity observed after the technical implementation of protocol improvements during the last analyzed quarter.
Although the asset was trading up 2.2% reaching 2,992 dollars, structural barriers maintain a climate of uncertainty regarding its evolution. The success of the Ethereum Fusaka upgrade will depend on its ability to retain active developers and users against an expanding competitive offering, requiring constant innovation to maintain its relevance within the global decentralized financial market.
