Ethereum Network Boosts Transaction Capacity with Gas Limit Increase
The Ethereum network has recently made significant strides in enhancing its transaction capacity. Late on Monday, validators on the network reached a consensus to increase the gas limit for the first time since late 2021, marking a notable moment in the post-Merge era of Ethereum. As of Tuesday morning, the gas limit had risen to nearly 32 million gas units, with a maximum expected capacity of 36 million units. The last major adjustment occurred in 2021, when the limit surged from 15 million to 30 million gas units.
This pivotal change was implemented automatically, requiring no hard fork or network split, after more than half of the validators supported the adjustment. In the context of Ethereum, gas refers to a unit that quantifies the computational effort needed to execute operations, such as processing transactions or executing smart contracts. Each operation is assigned a specific gas cost, ensuring that users compensate for the actual computational resources their activities consume.
The gas limit represents the total amount of gas available for use in a single block. If the gas consumption of transactions in a block exceeds this limit, those transactions are either postponed to the subsequent block or must compete based on the gas price offered for inclusion. By raising the gas limit, Ethereum can accommodate a greater number of transactions or more intricate operations within each block, thereby enhancing overall network throughput. This improvement fosters the development of sophisticated decentralized finance (DeFi) applications with minimal downtime.
Moreover, higher gas limits contribute to reduced congestion during peak usage times. This decrease in congestion is crucial, as high demand can drive up costs and prompt users to seek less expensive alternatives, such as the Solana network. Enhancing network utility may also bolster investor interest in Ether (ETH), providing support for the world’s second-largest cryptocurrency, which has seen a decline in investor sentiment over the past year.
Recently, Ether (ETH) fell to its lowest valuation against Bitcoin (BTC) since March 2021, as the token continued to lose ground to its more dominant counterpart. At one point in January, one ether was valued at 0.03 BTC, representing a nearly 50% decrease compared to the previous year, coinciding with Bitcoin’s rally leading up to the inauguration of U.S. President-elect Donald Trump. The ETH/BTC exchange rate, which reflects the value relationship between the two cryptocurrencies, peaked above 0.08 in 2022, but has seen a significant decline since then, raising questions about ETH’s value proposition.
In addition to the recent gas limit increase, there is anticipation surrounding the upcoming Pectra upgrade. This upgrade is expected to significantly enhance the capacity of layer-2 networks—blockchains that operate on top of Ethereum—by doubling the blob target from 3 to 6. These “blobs” refer to large data packets utilized by layer-2 networks to temporarily store data, with the current configuration allowing for 3 blobs in each Ethereum block as of Tuesday.
