Ethereum (ETH) took a significant step forward this week with the successful launch of Fusaka, the latest major upgrade for the Ethereum network. This update, which combines two important technical improvements (hence the name 'Fusaka', a contraction of 'Fulu' and 'Osaka'), is designed to make Ethereum faster, more efficient, and more user-friendly for everyone.

What Exactly Does the Fusaka Upgrade Entail?

Fusaka is much more than a simple software update; it is a fundamental overhaul of how Ethereum processes data and achieves network consensus. The main components and features are:

1. Peer Data Availability Sampling (PeerDAS)

This is the absolute main attraction of the upgrade and the engine behind the scaling capabilities.

More Efficient Data Processing: Normally, nodes on the network had to download the entire dataset of a transaction block to verify its validity. With PeerDAS, this massive amount of rollup data is fragmented into smaller "cells." Nodes now only need to download and verify a sample of these small fragments.

Result: This significantly reduces the required bandwidth and computational capacity for nodes. This makes the network more efficient without compromising security and keeps the hardware requirements for node operators the same.

Advantage for Layer-2 Networks: For Layer-2 (L2) solutions like Arbitrum, Optimism, Base, and zkSync – which store data on the Ethereum mainnet – this is crucial. PeerDAS enables them to process data up to 8 times faster and cheaper. This means lower transaction costs and more room for growth for L2 users.

Fusaka also increases the maximum amount of computation that can be performed in one block by raising the gas limit to 60 million per block.

More Capacity: A higher gas limit simply means that more transactions fit into one block during busy times. This effectively doubles Ethereum's total transaction capacity in the coming months.

“Instant-Feel” Experience: The upgrade lays the groundwork for "near-instant transactions." New techniques make it possible to reduce the latency (delay) of transactions from minutes to milliseconds. Combined with lower costs, this opens the door to a new level of usability.

3. New Rules for Blob Fees

The update introduces a minimum 'blob fee' (part of EIP 7918). These costs are linked to regular transaction fees and ensure that the costs for data storage on the L2 networks do not drop close to zero. This is important to keep the relationship between network usage and the burning of ETH (which makes the currency scarcer) stable and transparent.

What has been the effect so far?

The reaction to the launch of Fusaka was immediate and positive, both technically and financially:

Price Increase: Immediately after the successful activation, the Ethereum price made a strong jump of approximately 4.5 per cent. Analysts and investors anticipate that these fundamental improvements could be a catalyst for further growth in the ETH price, as "price follows fundamentals."

Improved Usability Outlook: Although the full effects of the low transaction costs and increased speed will unfold over the coming weeks, the technical foundation has been laid for a significantly smoother and cheaper ecosystem for developers and users.

What can we expect?

Fusaka is a crucial component of Ethereum's long-term vision to become a scalable and sustainable global network.

Lower Costs for End-Users: The increased efficiency for the L2 networks is expected to lead to lower transaction costs (gas fees) for the end-user. This makes the daily use of DeFi applications, NFTs, and other Ethereum services more accessible.

Growth of Layer-2s: With the doubling of data throughput, L2 networks will have the capacity to grow faster and offer more innovative solutions.

Strong Fundamentals: The upgrade emphasises that Ethereum is focused on scaling while preserving the core principles of decentralisation and security. This makes the network strategically attractive, and the community's patience is now being rewarded with a platform ready for the next wave of adoption.

The Ethereum Foundation continues to closely monitor the network's performance to ensure the stability and efficiency of Fusaka, making the network ready to continue leading the market in the long term.

Disclaimer: This is not financial advice. Always consider conducting your own research and consulting professional advice before investing.