A Tale of Transaction Speeds

Solana has especially become a strong competitor to Ethereum, offering an average transaction processing speed of over 1,000 transactions per second, compared to Ethereum’s average of about 15 transactions per second. This has put more pressure on Ethereum’s developers to find new ways to speed up the Ethereum network. One proposal that has come up just in the past week is to increase Ethereum’s gas limit ceiling once every 6.4 minutes.

The “gas limit” is the highest number of units of gas the network is willing to pay for to process a transaction. Ethereum researcher Dankrad Feist, who filed Ethereum Improvement Proposal 9698 (EIP-9698) on the last Sunday of April, is suggesting that Ethereum establish “predictable exponential growth” in its gas limit by automatically increasing the gas units permitted by an incremental amount with each epoch. An Ethereum “epoch” lasts just over six minutes. If accepted, the proposed increments would begin on June 1.

EIP-9698 would allow Ethereum to increase its gas limit by over 100 times in the next four years. The number of simple transfers per block would rise from the current 1,428 to 6,000. This would take Ethereum’s average transaction speed from 15 transactions per second to 2,000, surpassing its fastest competitor, Solana.

The new proposal has drawn the attention of experts from Forbes, Binance, and NASDAQ. The change to how Ethereum increases its gas limit could have lasting implications for the blockchain and for its price. Faster transaction processing would allow for exponentially lower transaction fees, making ETH more attractive to traders and financial institutions.

Other Upgrades to Watch

While Feist’s proposal is the most carefully watched, it isn’t the only upgrade Ethereum is pursuing. Ethereum’s modular network structure allows the platform to test many potential upgrades at once. Besides testing upgrades in beta, Ethereum’s “Layer 2” applications also allow Ethereum to process more transactions off-chain, with lower cost in gas units and computing power. All of this has kept investors excited about Ethereum even amid the rise of smaller, faster competitors. This is because Ethereum’s modular approach means that, technically, there is no ceiling on how much Ethereum can scale its computing power. Other blockchains may be faster right now, but there is no theoretical upper limit on how fast Ethereum can become later.

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The next beta upgrade to hit the main network will be Ethereum’s Pectra upgrade, scheduled for May 7 scheduled for May 7. Pectra went live on Ethereum’s Hoodi testnet in late March without any issues, and developers are anticipating a successful upcoming launch. Pectra is essentially a scalability upgrade. It includes increased capacity for “blobs,” which allow Layer 2 applications to process more transactions off-chain. It also streamlines the movement of requests for deposits and withdrawals and increases the amount of ETH that users can stake. Finally, Pectra includes several security features, as well, designed to keep smart contracts and user data secure on the network.

Between Pectra in May and Proposal 9698 in June (if approved), there is a lot of potential for Ethereum to lower its transaction fees and attract more investors in the coming months. While no one can provide specific predictions about what these upgrades will mean for the ETH to NZD rate, a successful Pectra launch could trigger a bull run for Ethereum. As for the proposed lift of the gas limit, exponential increases in transaction speeds make Ethereum more attractive to investors who are currently on the fence as to whether to put their funds in ETH or SOL. One thing is certain: There are potentially momentous changes ahead for Ethereum.