Fusaka reshapes Layer 2 economics

Investors are watching closely as the ethereum upgrade called Fusaka approaches, bringing fresh focus to how the network captures value from Layer 2 activity.

Fusaka goes live after one of ETH’s sharpest drawdowns

Ethereum will activate its long-awaited Fusaka upgrade on December 3, at a time when ETH is emerging from one of its steepest drawdowns in the last two years. The decline followed the October 10 liquidation cascade and subsequent selling pressure across the crypto market, which weighed heavily on sentiment.

Despite this difficult backdrop, the network continues to move ahead with an ambitious scaling roadmap under a new leadership structure and a more commercial focus. Moreover, developers have kept shipping major releases on schedule, reinforcing confidence in Ethereum’s long-term direction.

Since the launch of the Pectra upgrade in early May, ETH has surrendered most of its gains. However, it has still outperformed Bitcoin and Solana over the same period, showing relative resilience compared with other large-cap assets.

Fusaka upgrade details and design goals

Fusaka is the next major step on Ethereum’s multi-year ethereum scaling roadmap and introduces 13 Ethereum Improvement Proposals (EIPs). These proposals directly affect how the base layer processes data and manages throughput. In particular, they are designed to support rising activity across Ethereum’s Layer 2 networks while positioning the base chain to capture more value over time.

The flagship feature, Peer Data Availability Sampling (PeerDAS, or EIP-7594), allows Ethereum to verify large transaction data blobs without requiring every node to process the full dataset. This has been one of the main capacity constraints since rollups began dominating transaction and network activity on the chain.

By verifying small samples of data instead of an entire blob payload, the network can handle far more information within each block. As a result, costs should fall and speeds should rise across Layer 2 environments, while the base chain supports heavier activity without increasing the burden on nodes that secure it.

Security, one of Ethereum’s core value propositions, is maintained because data availability is checked across a wide network of nodes. Moreover, the consensus assumptions around settlement and validation rules remain unchanged, which is critical as demand on L2 rollups continues to expand.

Fusaka also bundles several EIPs that refine how the base layer handles higher throughput. Block gas parameters will be updated so that blocks absorb more activity without sacrificing reliability, and upgrades to cryptographic operations should improve hardware-based authentication and verification processes used by many applications.

EIP-7918 will introduce a minimum base fee for blob data. This tackles a key problem where blob fees often dropped to negligible levels, leaving Ethereum’s data availability market without a sustainable revenue source. In practice, the protocol has been providing a crucial security service for almost no compensation.

Why the Fusaka upgrade matters for investors

For many investors, the story around Ethereum still centers on its longstanding underperformance and failure to break and hold above its previous all-time highs. However, the sharp decline in Layer 2 fees after the Dencun upgrade in March 2024 has created fresh concerns about weak revenue optics at the protocol level.

The surge in new L2 activity over the last year has further complicated the investment narrative. Lower rollup fees often obscure the near-term impact of protocol upgrades, making it harder for investors to connect engineering milestones with observable financial outcomes on Ethereum’s base chain.

Fusaka introduces several changes that will reshape how value flows through the base layer, and the most direct beneficiary is Layer 1 block space, where transactions are finalized and users pay network fees. When the network becomes more efficient in execution or in processing large volumes of data, fee burn and validator rewards typically increase slowly over time, even if the effects are not immediately visible.

Within this context, the ethereum upgrade introduces a minimum fee for blob data, which is a crucial adjustment. A defined cost floor, combined with higher data capacity from PeerDAS, means Ethereum can now price one of its most important services more explicitly and more sustainably.

These changes will influence how Layer 2 networks structure their costs. Some rollups could face tighter margins as the cost of posting data rises, while others may fold the new economics directly into their fee models. That said, a larger share of the economic activity generated on rollups should pass through Ethereum’s settlement layer.

Meanwhile, designs such as based rollups and validator pre-confirmations may extend this trend by allowing Ethereum validators to participate more directly in ordering transactions, or transaction sequencing. This, in turn, could increase the share of value that accrues at the base layer and strengthen what many analysts describe as base layer economics.

Other improvements target smaller inefficiencies that become more prominent as network usage expands, such as transactions relying on secure hardware or operations that previously incurred higher computational overhead. These refinements do not change how users interact with Ethereum day to day. However, they make underlying processes more efficient and reduce friction that naturally builds up as traffic grows.

At a higher level, Fusaka moves Ethereum toward a more economically viable infrastructure overall. It reinforces the mechanisms that direct value through the protocol and helps align validators, developers, Layer 2 operators and tokenholders. For investors, the upgrade should provide a clearer framework for understanding where value is generated and how it is captured on the base chain.

Catalysts and outlook after December 3

Fusaka lands at a time when activity across Ethereum’s Layer 2 networks is running at record highs, with Base emerging as a notable leader. Moreover, Ethereum developers have built a strong record of delivering major upgrades on schedule, so another smooth execution would further bolster confidence in the network’s long-term viability and its culture of continual innovation.

There are additional supportive catalysts on the horizon. These include staking-enabled ETF applications, such as BlackRock’s recent submission, as well as growing stablecoin and tokenisation inflows that have reached new highs. At the same time, on-chain data points to whales accumulating ETH after the October liquidation event, while exchange reserve balances continue to trend toward new lows.

Taken together, these dynamics support a more constructive outlook for Ethereum as the leading smart contract platform. If network activity remains robust and the protocol continues to capture a larger share of Layer 2 value, the period following Fusaka could mark a decisive phase in the evolution of Ethereum’s on-chain economy.