Ethereum’s Pectra Upgrade: Enhancing Smart Accounts and Institutional Staking Potential with Key EIPs

Ethereum’s Pectra upgrade will bring smart accounts, higher staking limits, and improved scalability through key EIPs, simplifying user experience and institutional staking.

Pectra is scheduled to go live on Ethereum mainnet at the start of epoch 364032, May 7, 2025, at around 10:00 am UTC. The three main Ethereum Improvement Proposals (EIPs) included are EIP-7702, EIP-7251, and EIP-7691.

Ethereum Pectra Consensys announcement. Source: Consensys

EIP-7702 allows externally owned accounts to act as smart contracts and cover gas expenses (transaction fees) and payments in tokens that are not Ether (ETH). EIP-7251 increases the validator staking limit from 32 ETH to 2,048 ETH, simplifying operations for large stakers. Lastly, EIP-7691 increases the number of data blobs per block, allowing for better layer-2 scalability and potentially significantly reducing transaction fees. Sergej Kunz, co-founder of Ethereum decentralized exchange (DEX) aggregator 1inch, stated Pectra “introduces ‘smart account’ functionality” at deeper protocol levels and “improves Ethereum’s scalability” through layer-2 solutions.

Better Account Abstraction with EIP-7702

0xAw, lead developer at Base Ethereum layer-2 DEX Alien.Base, told Cointelegraph that EIP-7702 “is a potentially great addition for Ethereum.” He explained that account abstraction has so far struggled to gain traction due to the need for users to switch wallets. The benefits of adopting such a solution include eliminating approval flows, not having to sign each transaction, segregated permissions and actions, and automations on behalf of the user. 0xAw emphasized that following the update, developers will find it easier to implement features that simplify user interactions.

While he noted that account abstraction “won’t magically result in mass adoption,” it does “remove a significant barrier to entry for new users.” He added: “It enables a Web2-like UX by hiding many of the underlying scaffolding from users.” 1inch’s Kunz further remarked that the update will pave the way for native gasless transactions and simplified user flows.

Easier Institutional Staking

Artemiy Parshakov, vice president of institutions at Ethereum staking service P2P.org, explained that EIP-7251 makes institutional staking much easier to integrate without adding excessive risk. Previously, staking service clients had to obtain a signed message from their service provider to exit, which had to be securely stored for later use. Under the new Pectra framework, stakers can exit without waiting for the participation of the staking service provider, as the exit delay has been drastically reduced from about 13 hours to approximately 13 minutes.

On-Chain Validator Deposits with EIP-6110

Another notable upgrade is EIP-6110, which enables the execution-layer block to include data about new validator deposits to the consensus layer. This upgrade streamlines the process of new validators joining Ethereum’s staking protocol. Traditionally, consensus clients waited for block proposers to vote on a Merkle root summarizing deposits. Now, EIP-6110 allows blocks to directly supply a list of new verifier deposits.

Parshakov highlighted that while the upgrade enhances Ethereum’s consensus layer, there is still concern over potential client bugs. He remarked, “Our biggest concern is client bugs, but we trust that respectable teams and the Ethereum Foundation are collaborating to prevent issues on mainnet.”

Conclusion

Ethereum’s Pectra upgrade represents a significant advancement in user experience and institutionally focused staking, with key improvements in account abstraction and staking efficiency. As these changes unfold, they are poised to streamline operations for both individual users and institutions, emphasizing Ethereum’s commitment to innovation. Moving forward, the industry will closely monitor the implementation to ensure seamless integration and address any potential risks associated with these enhancements.