Two things have happened to Ethereum this month that, for a long time, felt like they were never going to happen: Pectra went live and ETH went up. It’s safe to state there’s a connection between the events, with the correlation no mere coincidence. That’s not to say ETH’s robust rally is all because of Pectra, for its gains must be measured against an uptick in all major crypto assets during May.

It’s clear, however, that with Pectra over the line at last, the confidence pulsating through the Ethereum ecosystem is palpable – and the first evidence of that can naturally be found on the markets. But behind the scenes, other Pectra benefits are starting to yield dividends. For DeFi developers, especially, there’s a host of new features to get to grips with, which they can leverage to create enhanced dapps, staking products, and Layer 2 solutions.

ETH Perks Up Following Pectra

ETH is up 38% since the start of May and, just as significantly, is up 25% on BTC in the same period. It’s compelling evidence that this isn’t just the crypto market rally propping up ETH: its impressive gains can be attributed to something more intrinsic. While ETH is still down significantly on BTC for the last 12 months, its recent rally has clawed back some of the ground it’s ceded to other majors while drawing mindshare back to the home of DeFi.

While it remains to be seen whether ETH can form foundational support around its new price level, and from there ascend higher, it appears that its slow decline has been arrested. Just as the halvening shines a spotlight on Bitcoin every four years, Ethereum’s usually annual hard forks draw attention from traders, developers, and DeFi users alike. For a long time this year, that attention was for all the wrong reasons, as technical issues caused repeated delays to Pectra. But now that it’s live and working smoothly on mainnet, talk can turn from deploying Pectra to taking its new features and building with them – something Ethereum devs have been itching to do for ages. The question is, what will they build?

Putting Pectra to Work

Proactive DeFi protocols – typically the larger and more well funded projects – have already been setting their affairs in order in readiness for Pectra’s arrival. This is particularly true of staking protocols, whom Pectra impacts the most. P2P.org has been vocal about its Pectra prep, ensuring its clients know exactly what to expect moving forwards. As the first staking provider to fully support Pectra, it’s already integrated core features such as validator consolidation, autocompounding, partial withdrawals, and operator switching. It’s also launched the first Validator Consolidation Calculator, which reveals the financial benefits of consolidating validators.

Indeed, the most discussed and drastic of Pectra’s new features is the increase of the staking limit from 32 to 2,048 ETH per validator, which is something that will prove of particular value to institutions and other major players. This not only makes it easier to manage validators, but also supports greater capital efficiency and streamlines operations. With Pectra now live, expect to see new staking services emerging that cater to distinct audiences, including institutions, as well as further innovations in restaking to secure EVM Layer 2s and protocols.

Making Dapps Do More

Aside from staking, Ethereum dapps also have the potential to become more user-friendly now that Pectra’s in the bag – or at least they do for projects willing to take advantage of features such as account abstraction, enabled via EIP-7702. This allows externally owned accounts (EOAs) to temporarily act like smart contracts. What this means in practice is that a dapp can pay gas fees on behalf of the user, for example, which is ideal when it comes to onboarding.

The need to hold ETH in your wallet before you can do anything on Ethereum is something that isn’t necessarily intuitive to beginners. And even if they understand the basic concept, they may struggle to see why this rule is in place. Well, now they don’t need to: following Pectra, an Ethereum dapp can allow the user to purchase USDC using an integrated fiat gateway and then let them send that USDC – all without the need to convert part of it to ETH for gas.

Account abstraction has other uses too, particularly when it comes to account recovery. Normally when you lose your private keys you lose access to your wallet for good. Now, with support for social recovery, lost keys don’t have to be fatal. It’s another way in which Pectra supports smarter dapps that are easier to use, which in turn will make it simpler for users to enter the Ethereum ecosystem.

There’s a lot more that comes bundled with Pectra, from increased blob throughput (reducing rollup fees) to more advanced smart contract logic, but the key takeaway at this stage is this: Pectra’s working and Ethereum developers are working with Pectra. In the months ahead, everything from staking to Layer 2 dapps is going to improve – and it will be thanks in no small part to Pectra and the renewed capabilities and confidence it’s gifted Ethereum.